The share of affordable housing to total new launches in Chennai almost doubled from 25% in 2017 to 50% 2018.
THE housing shortage in the urban areas has been estimated at 18.78 million units, out of which 96% was in the EWS and LIG segment. Total housing shortage is projected to be about 38 million by 2030, according to Ministry of Housing and Urban Affairs.
As per 2012 statistics, Uttar Pradesh tops the list of states having a housing shortage with over 3 million homes and Maharashtra is the second with a shortage of fewer than 2 million units, followed by West Bengal, Andhra Pradesh and Tamil Nadu. These top five states contribute 47% of the total housing shortage in India.EWS and LIG together account for nearly 96% of the shortage and there is a huge market that needs to be addressed by property developers.
The demand for housing in Tamil Nadu is over 1.2 million units out of which 95 per cent of the shortage is for units in the EWS and LIG sector, according to government sources. Affordable housing activity picked up in 2014 after the announcement of 'Housing for All by 2002' campaign by the government. Post-2015, Indian real estate sector was grappled with subdued demand and as a result, the overall new launches were on a decline. Nonetheless, the average share of affordable housing supply to total new launches was around 40% between 2013 and 2018, indicating the incessant activity in this segment. In 2017, affordable housing supply had the highest share of 45% to total new launches and it increased by 18% in 2018 over 2017.
This is the first positive sign of market recovery after the regulatory changes. Total new supply between 2013 to 2018 (approximately 19.9 lakh units) was added across the top seven cities of which more than 38% of the supply catered to the affordable segment (i.e. unit prices <Rs40 lakh). PAN-India, affordable housing supply share increased from 35% in 2013 to 45% in 2017, and was recorded at 40% in 2018 due to several government initiatives to improve the affordable housing stock. The share of affordable housing to total new launches in Chennai almost doubled from 25% in 2017 to 50% 2018. As regards affordable housing supply and unit sizes by budget segmentation in Chennai, an estimated 12% was in the price range of Rs 10-20 lakh, 34% in the price range of Rs 20-30 lakh and 54% in Rs 30-40 lakh. In Chennai's IT/ITES hub.
Rs30-40 lakh budget unit accounts for 35% of the supply. In Chennai, the peripheral locations have become hotspots for affordable housing development due to competitive land price, flexible land options and improved connectivity levels. Areas like Oragadam, Guduvancheri, Perumbakkam, Nallambakkam, Chinglepet, Tiruporur and Trivellore are seeing a surge in the number of affordable housing projects and improved level of absorption. There has been a spurt in the number of developers undertaking development of affordable housing due to infrastructure status, flexible financing options, fiscal sops, tax holiday and demand supply mismatch in the city. The Union budget has given further impetus to affordable housing by creating a dedicated fund under which it will ensure that 37 lakh houses are built in urban areas by end of FY2018-19.
On the buyer front, the government has taken several measures to boost demand for affordable housing. Tax benefits of Rs 50,000 for first time homebuyers on the home loan sanctioned, households earning between Rs6-12 lakh a year can claim 4% subsidy on the home loan and Rs12-18 lakh earning households can get 3% subsidy on home loans and slash in GST to 1% minus ITC, are just to mention a few of the major benefits.