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Luxury Housing Rising at the Cost of Affordable Housing

Torbit - May 26, 2024 - - 0 |
Luxury Housing Rising at the Cost of Affordable Housing

As the residential real estate segment makes strides, luxury housing has been steadily eating into the share of affordable housing. Over the last five years, while the share of luxury housing has grown three times, the affordable housing share has almost halved.

The relentless march by real estate continues in Q1 2024 in terms of both sales and new launches, but the gains are increasingly uneven across budget segments. Latest ANAROCK data comparing luxury and affordable housing sales share shows luxury gaining markedly while affordable housing continues to bleed.

Of approximately  1,30,170 units sold across the top 7 cities in Q1 2024, the share of luxury homes priced over INR 1.5 Cr was 21 percent or nearly 27,070 units. This contrasts sharply with the trend of five years ago. In Q1 2019, affordable housing was at its peak, holding a share of 37 percent out of approximately  78,525 units sold across the top 7 cities. Luxury housing had a mere 4 percent share.

According to Anuj Puri, Chairman, Anarock, around 26,545 affordable housing units were sold in Q1 2024, accounting for an overall sales share of 20 percent in the top 7 cities. The mid-range and premium housing segment continued to rule the roost with about. 76,555 units sold in the period – a near-59 percent overall sales share. Affordable housing is nowhere near to recouping its stellar sales share in 2019.

In terms of regions, there are interesting variations. City-wise data indicates that of approximately 15,645 units sold in NCR in Q1 2024, the highest sales – nearly 6,060 units or a 39 percent share – were in the luxury segment (units priced over INR 1.5 Cr). On the other hand, of approximately 5,650 units sold in Kolkata in the same period, affordable housing saw the highest sales of approx. 2,765 units, or a 49 percent share.

While Kolkata continues to have similar trends as in Q1 2019, NCR saw a major trend reversal in this five-year period – from the affordable segment having the lion’s share in Q1 2019 to it slipping to the lowest in Q1 2024.

Bengaluru, MMR, Chennai, Pune, and Hyderabad, on the other hand, saw their highest sales in the mid-range and premium housing segments (priced between INR 40 lakh and INR 1.5 Cr) in Q1 2024.

“As luxury homes gain more traction in both new supply and sales, affordable housing continues its retreat to the sidelines. The luxury segment is driven by a mounting appetite for bigger homes by branded developers in superior locations. Affordable housing, on the other hand, is driven primarily by lower ticket sizes. The downward spiral of this erstwhile posterchild of the Indian housing industry began during the pandemic, and then morphed into a broader malaise. Even as the nation awaits the results of the ongoing general elections, any affordable housing revival will hinge on further government sops and incentives for buyers and developers, says Puri”

Of approximately 1,10,860 units launched in Q1 2024 across the top 7 cities, nearly 28,020 units (or 25 percent) were luxury homes and just 19,980 units (18percent) were in the affordable segment. Five years ago, in Q1 2019, out of approx. 70,480 units launched across the top 7 cities, affordable housing comprised a whopping 44 percent share while luxury had mere 9 percent share. It is little wonder that developers are aligning supply with the prevailing demand and are launching more luxury housing projects now.

Segment Wise Sold Units Q1 2024

Source: ANAROCK Research

Affordable vs Luxury Housing 

If we consider the past five-year data trends, the new supply and sales share of luxury homes has been rising steadily. In pre-Covid 2019, luxury homes accounted for approx. 11 percent  of the overall new supply in top 7 cities. In Q1 2024, this share has gone up to a whopping 25 percent  2019 saw only approximately 25,770 units launched in the luxury segment in the entire year; currently in Q1 2024, 28,020 luxury homes were launched in just this one quarter.

Luxury Housing Supply Share across Top 7 Cities

Source: ANAROCK Research

Affordable housing, however, has seen a major trend reversal. This segment has seen its new supply share shrink considerably over the last five years. In 2019, the new supply share of affordable homes stood at 40 percent out of the overall new supply additions (approximately  2.37 lakh units) in the top 7 cities. However, in Q1 2024, data indicates that its supply share has dropped to a mere 18 percent of the total new launches.

Affordable Housing Supply Share across Top 7 Cities

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