Affordable housing is the only silver lining for the battered real estate sector right now. One in every two houses sold in the December quarter was under the Rs 50 lakh bracket as government sops and lower price tags gave a push to sales, according to data from real estate consultancy Liases Foras.
While 32 per cent of total sales were in the affordable category in December FY16 quarter, the number has crossed the halfway mark now. Alongside, sales in the Rs 1 crore to 2 crore category has more than halved from 29 per cent to 12 per cent in the third fiscal quarter.
"Maximum affordability lies in the sub-50 lakh segment. Moreover, the government is giving sops for affordable housing, which is a big incentive for buyers as well as developers," Pankaj Kapoor, founder and MD of Liases Foras, told Business Today.
Under the PM Awas Yojna (PMAY), households with an annual income of up to Rs 18 lakh can avail Rs 2.3 lakh upfront subsidy for a home. Buyers are also eligible for income tax exemption on housing loans.
"The Government has set the ambitious goal of 'Housing for All' by 2022 to create a housing revolution. With this, India has ramped up massively on the affordable housing segment, and this shall be leading the space in Indian real estate for the next couple of years," said Dr Niranjan Hiranandani, CMD of Hiranandani Communities and National President, NAREDCO.
Developers, under Section 80-IAB, also get 100 per cent deduction on profits generated from an affordable housing project for flats up to 30 sq metres in four metros cities and 60 sq mt in other cities. This also boosted supply in the segment. In tune with the demand, 51 percent of the new launches in the December quarter were in the cost bracket of under Rs 50 lakh.
"Three years back, builders were dedicating supply to the premium segment (above Rs 50 lakh). Today, the market has rationalised and a major part of the new supply is directed at the affordable segment," Kapoor added.
Hiranandani said the recent budget proposals shall give the required thrust to this segment along with the tax benefits announced. "Looking at the current economic scenario and volatility in the real estate sector post economic reforms, availability of cheap funds at feasible rates is very crucial. Also, the land must be given by the government at a cheaper rate to create the mass housing projects, which make it lucrative for more developers to enter the segment," he added.