COVID-19 Derails Affordable Housing Growth in 2020

The COVID-19 pandemic is all set to derail the growth momentum of affordable housing in 2020.

This will be one of the worst-affected segments. ~ 6.1 lakh affordable units were under construction across the top 7 cities until the lockdown was announced, reveals ANAROCK’s latest report. This is over 39% of the total 15.62 lakh under-construction (UC) units in the top 7 cities – the highest share of all budget categories.

While the report estimates overall unsold housing inventory to shrink annually by 1-3% in 2020, the unsold affordable stock may actually increase by 1-2% in this period. As on Q1 2020 end, there are more than 2.34 lakh unsold affordable homes in the top 7 cities - 36% of the total unsold stock across all budget categories.

“The Government’s ‘Housing for All’ push coupled with multiple sops to buyers and developers brought on an avalanche of affordable housing projects in India," says Anuj Puri, Chairman - ANAROCK Property Consultants. "As much as 40% of the new supply added across the top 7 cities in the past few years was in the affordable segment (units priced < INR 40 Lakh). Resultantly, there is a huge under-construction supply of about 6.1 lakh units in the affordable segment.”

“This segment will be severely impacted by the current COVID-19 outbreak. The target audience typically has limited income and unemployment fears currently loom large. This could result in deferred property purchase decisions in 2020 and ultimately derail the segments’ growth momentum. As a result, unsold affordable stock can rise by 1-2% on a y-o-y basis.”

Affordable Housing Supply

There are altogether over 6.1 lakh affordable units under construction across the top 7 cities, of which NCR and MMR alone account for nearly 59% - or 3.59 lakh units. These units were launched between 2013 to 2019. Both cities together also have a 57% share (approx. 1.34 lakh units) of the overall unsold stock of 2.34 lakh units in the budget homes category. (Unsold affordable stock consists of both under-construction and ready-to-move homes.)

• NCR has the maximum under-construction affordable housing stock with more than 1.87 lakh units. Unsold stock in this budget category is nearly 64,430 units in NCR.
  
  
• MMR is next with nearly 1.72 lakh affordable units under construction. The unsold affordable stock as on March 2020-end is 68,970 units.
  
  
• In Pune, under-construction affordable housing stock is close to 1.31 lakh units, while unsold affordable homes stand at nearly 46,630 units.
  
  
• Kolkata continues to have the maximum new supply in the affordable housing category, with a current inventory of 55,300 affordable units (priced within INR 40 lakh) under construction. The city's unsold affordable housing stock is 27,040 units as on Q1 2020 end.
  
  
• Bangalore has merely 16% (or 32,300 units) under construction in the affordable category, out of a total of 2 lakh units under construction. This is the lowest share among all top 7 cities. Unsold affordable housing stock in Bangalore is currently just 14,800 units.
  
  
• Chennai has 19,500 affordable housing units under construction; the unsold affordable inventory is just 9,220 units.
  
  
• Hyderabad has the lowest share of both under-construction and unsold affordable housing stock. UC stock stood at 11,000 units and unsold affordable inventory was just 3,370 units.