While the new supply of affordable housing has been shrinking over the last two pandemic years, demand remains healthy. Out of the total unsold stock across the top seven cities, reveals ANAROCK data, affordable housing inventory saw the most significant decline of 21% in the last two years. The unsold inventory in the affordable sector has fallen from 2,34,600 units by Q1 2020-end to 1,86,150 units by Q1 2022-end. During the same period, the premium and luxury segments with price range between ₹80 lakh and ₹2.50 crore have witnessed an increase in the total unsold stock.
Among the top seven cities, Chennai, Pune and Mumbai Metropolitan Region (MMR) saw the highest decline in their unsold affordable housing stock over the last two years, with 52%, 33%, and 27% reductions, respectively. These declines directly correlate to the intentional restriction of new budget housing supply.
Affordable housing took the biggest hit from the pandemic, with the first perceivable change being its declining share of new supply. Data reveals that out of approximately 70,480 units launched in the top seven cities in Q1 2019, says Anuj Puri, chairman, ANAROCK Group, in which affordable housing had a 44% share. This segment's supply share has been declining year-on-year, reducing to 38% in Q1 2020 and further to 30% in Q1 2021. In Q1 2022, its share of new supply had declined to 25%.
“Restricting new affordable housing supply has helped developers clear previous stock of unsold budget homes,” says Puri. He adds that this is the highest supply reduction among all budget categories — clearly reflecting an enduring demand for affordable homes.
As per data by ANAROCK, the ultra-luxury homes segment also fared well. The segment saw a 5% supply decline from approximately 41,750 units by Q1 2020-end to around 39,810 units by Q1 2022-end across the top seven cities in the same period. The drop in the unsold stock was seen despite the addition of significant new supply to address resurging demand for ultra-luxury homes during the pandemic. MMR and Kolkata saw the highest inventory reduction of 16% and 15%, respectively.
As many as 6,27,780 units currently lie unsold across the top seven cities. Of this, 1,86,150 units are in the affordable segment alone.
Robust demand for homeownership
“Nevertheless, the new pandemic-induced desire for homeownership continues to be robust," says Puri. As per the CII-ANAROCK Survey conducted earlier during this year, at least 63% of previously fence-sitting respondents are now determined to become homeowners. For another 30%, the pandemic has not impacted their buying decisions, effectively resulting in 93% of respondents now convinced homebuyers.