AFFORDABLE AND MID-SEGMENT TO DRIVE GROWTH
India's affordable housing market is driven by the growing middle-class population and increasing working population. This has led to the large influx of population especially in Tier 1 cities for educational and occupational purposes.
- Anshuman Magazine
Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE
India's affordable housing market is driven by the growing middle-class population and increasing working population. This has led to the large influx of population especially in Tier 1 cities for educational and occupational purposes. With regards to housing development, the government has also launched several initiatives to make housing a reality for all. As part of the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs, government's commitment towards boosting affordable housing is expected to remain intact.
The government has already extended PMAY (Urban) by two more years till 31 December 2024 - which is expected to boost investor and developer sentiments in this segment. There have also been a few instances of further refining of the state RERA acts for further streamlining the segment.
India has also witnessed an increase in demand for homes due to the pent-up demand for independent and plotted developments. In the wake of long wait times and project delays, ready-to-move-in apartments are currently more in demand than under-construction properties.
The government has also set up Rs 48,000 crore for PMAY this year as part of the Union Budget. By 2022-23, 80 lakh dwellings are expected to be completed under PMAY, with 60,000 houses in both rural and urban regions designated as beneficiaries. With the exception of the pandemic years, a number of reasons have lately contributed to the growth of the low-cost housing category, including household consumption, the advent of reputable real estate developers, government assistance, growing urbanization, and increased incomes.
In addition, reduction in GST rates on affordable housing to one per cent from 8 per cent and expanded scope of affordable housing has given boost to this segment. SWAMIH (Special Window for Affordable & Mid-Income Housing), a government backed fund that was set up as a Category-II AIF (Alternate Investment Fund) will also give push to RERA-registered affordable and mid-income category housing projects which are stuck due to paucity of funds.
The year 2022 is likely to end on a high note for the affordable housing market as it continues its growth trajectory on account of strong homebuyer sentiments. Affordable/budget homes accounted for 25% of unit sales in Q3 2022. While the segment accounted for 27% of new launches in the same period.
Looking ahead, the future of residential can be expected to remain aligned with the affordable and mid-segment due to the strengthened policy impetus. Moreover, the positive homebuyer sentiment will drive housing sales as well as new launches in the affordable housing segment. Further, as the commute lowered due to hybrid and satellite offices setups, cities' peripheral locations will continue witnessing a higher demand as they offer more accommodative and larger homes at relatively lower prices.
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