A steady decline in the share of affordable homes in new housing

MUMBAI: On the one hand, while housing prices are skyrocketing in urban areas, developers are seen moving away from affordable housing schemes announced for the poor and the middle class.

In 2022, the share of affordable housing in the seven metros of the country has decreased to 20 percent from 40 percent in 2018. Under the Affordable Housing Scheme, residences are provided at a price below Rs 40 lakh.

A total of 357,650 new residences were launched in seven metros in 2022, of which less than 20 percent were affordable or priced below Rs 40 lakh, said a report by a research firm.

In 2018, the share of affordable housing was 40 percent in 1,95,300 new launches. However, after 2020, there is a decrease in it. In 2020, the share decreased to 30 percent and in 2021, it came to 26 percent.

Developers have become indifferent towards affordable housing schemes due to high land prices, increase in lending rates and low profit margins.

High cost of land is becoming a big problem for developers. Developers can deduct land costs by building premium and mid-range residences, but cost deducting through affordable housing remains difficult. Profit margins are also quite common in cheap houses. The report also noted that the prices of raw materials for residential construction such as steel, cement, etc. have increased in recent times.