Affordable housing demand down to 26% in 2022: Sector expects on budget

While the affordable housing segment, the backbone of the housing sector has witnessed a poor performance, the country's residential real estate sector looks to Budget 2023-24

Affordable housing demand down to 26% in 2022: Sector expects on budget
Affordable housing demand down to 26% in 2022: Sector expects on budget. Photo: Bloomberg
IANS New Delhi
3 min read Last Updated : Jan 30 2023 | 1:11 PM IST

While the affordable housing segment, the backbone of the housing sector, has witnessed a poor performance, the country's residential real estate sector looks to Budget 2023-24 to boost the country's flagging affordable housing segment.

ANAROCK's Consumer Sentiment Survey finds that in 2022, demand for affordable housing has sunk precariously. In 2018, nearly 39 per cent property seekers in the top seven Indian cities were keen on affordable homes priced within Rs 40 lakh. This demand shrunk to its lowest levels in 2022, with just 26 per cent property seekers looking to buy in this budget segment.

There is significant unsold affordable stock across the top seven cities. Of nearly 6.30 lakh unsold units in the top seven cities by 2022-end, affordable housing accounted for over 27 per cent. Demand has remained low for this segment since the pandemic, and the government needs to revitalise it on a priority basis. The upcoming budget presents an opportunity to do so.

The segment had revived after the government began to roll out incentives from 2015 and became 'respectable' with both buyers and developers. However, the pandemic seriously impacted the affordable housing segment, with both demand and supply shrinking to their lowest levels.

"One possible way the Budget can intervene is by revising the price bandwidths for homes that qualify as affordable housing, as per the specific market dynamics of different cities," said Anuj Puri, Chairman - ANAROCK Group. "The size of units that qualify for various affordable housing benefits is currently 60 sq m on carpet area. While this is appropriate, the uniform price band of up to Rs 45 lakh for affordable housing is not aligned with the market realities of most major cities."

Rs 45 lakh or below is far too low in a city like Mumbai, where it should be increased to Rs 85 lakh or more. In other major cities, the price band should be increased to Rs 60-65 lakh. This would result in more homes qualifying as affordable housing, enabling many more homebuyers to avail benefits such as reduced GST at 1 per cent without ITC, and other government subsidies.

"More tax sops for housing end-users and investors for affordable housing would also boost demand," said Puri. "The current tax rebate of Rs 2 lakh on housing loan interest under Section 24 of the Income Tax Act must be increased to at least Rs 5 lakh. This will add momentum to housing demand, particularly in the cost-sensitive affordable segment."

"Budget 2023-24 can also push the government's affordable rental housing scheme that was launched post the pandemic. Covid-19 put serious constraints on the lower income groups, causing many to step away from homebuying aspirations altogether. To add momentum to its Housing for All vision, the government can use the Budget to incentivize ARHCs (Affordable Rental Housing Complexes) which can fill the gap until homebuying capacity in the lower income groups improves, he added.

--IANS

kvm/dpb

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :housing sectorBudget 2023Indian Economy

First Published: Jan 30 2023 | 1:11 PM IST

Next Story