Despite the lower than usual sales traffic in the real estate sector, the affordable segment has emerged as the hot cake for prospective homebuyers. Post the lockdown; the segment has witnessed a marked improvement in the number of site visits and sales. Going forward, the sector is likely to witness high and steady demand from buyers across the top eight cities of India.
The affordable housing segment survived the onslaught of the COVID-19 crisis, merely because it caters to the price bracket that has the maximum demand. The reason for the growth of the affordable segment, even amid the global crisis, can be attributed to a number of factors, including but not limited to the pent-up demand of the previous quarters. The liquidity infusion of Rs 3.74 lakh crore announced by the Reserve Bank of India (RBI) in March 2020, the extension in CLSS announced in May, and relief under EPF are some of the other factors that have augured well for the sector.
The biggest takeaway for the buyers, however, was the unprecedented cut in the repo rates, which resulted in home loan interest rates coming down to sub-seven percent. This has pushed the demand for affordable housing even further, especially post the lockdown. The tragedy also came as a blessing in disguise for the affordable housing sector, as the middle-class started to face challenges in staying at rented accommodations.
The turnaround can also be attributed to the fact that the affordable housing segment is being promoted by the government, and adequate support is being extended to the developers in the segment. To attract private participation in the sectors, the government rolled-out special incentives, such as use permission, 50 percent additional FAR/FSI, concessional loans at priority sector lending rates and tax reliefs at par with affordable housing to develop ARHCs on their available vacant land for 25 years.
While the real estate sector made a comeback in Q3 2020 with sales and new launches rebounding to almost 70 percent of the pre-COVID-19 levels, the affordable segment garnered the maximum attention. The segment amounted for more than 60 percent of the overall sales. It also saw the maximum number of new supply, as 70 percent of the launches happened in this segment.
Outlook for 2021: Affordable segment to rule the roost
Looking at the response of the affordable projects in the post-pandemic months and keeping in mind the over-subscription that the developers in this segment are likely to get, the year 2021 is going to be phenomenal for this segment.
Needless to say, the market for the affordable segment looks quite promising. With a slew of measures taken by the government, the government’s mission of providing housing to all seems to be on the right track. So far, around 1.06 crore homes have been sanctioned under the Pradhan Mantri Awas Yojana (PMAY), of which 33 percent are completed while another 66.23 lakh units have been grounded for construction. All this means that the buyers in the affordable segment will not have a dearth of projects in the coming times.