Half The Unsold Stock In India's Top 9 Markets Are Affordable Homes: Report

Developers in nine Indian residential markets are currently having nearly 7.39 lakh unsold housing units. Half of these units are affordable homes, indicate PropTiger.com data.

Note: Inventory overhang is the time builders are expected to take, to sell off the existing stock, at the current sales velocity.

Source: PropTiger DataLabs

Under the government's norms, all units priced up to Rs 45 lakhs are categorised as affordable homes and buyers can enjoy several tax rebates and other incentives, on the purchase of such homes. These include tax deduction of up to Rs 5 lakh every year on home loan repayment and lower GST (Goods and Services Tax) .

At the end of the March quarter of FY20, nearly 3.65 lakh affordable homes were lying unsold across India. When compared to the December quarter, the number has reduced slightly. At the end of Q3 FY20, 3.80 lakh affordable homes were lying unsold in cities, including Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna) , Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane) , Noida (includes Greater Noida and Yamuna Expressway) and Pune.

The muted demand for affordable homes is indicative that even while several measures were launched by the government to achieve its ambitious dream of ‘Housing for All by 2022’, more time may be needed, to yield the desired results, especially in the wake on the Coronavirus outbreak and its adverse impact on residential real estate. Apart from reducing the GST on affordable housing to one per cent in 2019, the government has also increased the tax deduction limit on the home loan interest component to Rs 3.50 lakh.

Major concentration of unsold inventory

A majority of the unsold stock in this category is present in the western markets of Mumbai and Pune. Mumbai and Pune have over 1.31 lakh and over 86,000 unsold affordable homes, respectively. Noida and Gurugram have another 55,000 unsold affordable homes.

Affordable housing inventory as on March 31, 2020 in 9 markets 

 Source: PropTiger DataLabs

Major demand for affordable homes

Of all units sold during the Q4 FY20 period, 48 per cent were affordable homes, an indication that this segment continues to drive the demand. A total of 69,235 homes were sold in Q4 FY20. A majority of the contribution to this sales came from Mumbai and Pune.

Fresh stock of affordable homes

Of the 35,668 units launched across the nine markets in Q4 FY20, 49 per cent was in the affordable category.