Of the total new home supply in seven major cities, the share of affordable homes costing less than Rs 40 lakh per unit fell from 40% in 2018 to 20% last year, according to Anarock.

Real estate consultant Anarock attributed the drop in share to a combination of factors, including higher land costs, low-profit margins and a lack of adequate low-rate financing.

The data showed that of the 3,57,650 units launched by property developers in 2022, only 20% are in the affordable home category, with each unit costing less than Rs 40 lakh. In 2018, 1,95,300 units were launched across the seven cities, 40% of which were in the affordable home category.

In 2019, the affordable home supply remained at 40% of the 2,36,560 newly launched condominium units. However, this drops to 30% of the total home supply of 1,27,960 units in 2020. In 2021, the share of the new affordable home segment fell further to 26%. In 2021, as many as 2,36,700 units will be launched in these seven cities.

The downward trend continued even last year, with the share falling to 20%. Obviously, one is land. While developers can quickly recoup the cost of land with mid-range and high-end housing, affordable home is a different story,” Anarock chairman Anuj Puri said.

Anarock points out that profit margins on affordable home projects are already razor-thin. As input costs (cement, steel, labour, etc.) rise, it becomes more challenging to develop affordable housing.

“One of the main reasons is that both input costs and land prices have risen sharply in the past few years, and developers have no room to launch such projects,” said Pradeep Aggarwal, chairman of Signature Global, a real estate firm based in Delhi NCR.

Signature Global primarily operates in the affordable housing sector. Anarock said the current demand is skewed towards apartments priced between Rs 40 lakh and Rs 1.5 crore. Krisumi Corporation is developing a luxury residential project on the Dwarka Expressway, Gurugram, MD Mohit Jain said, “We have witnessed a shift in India’s luxury real estate market over the past few years”. He added that homebuyer preferences have evolved from pure affluence and grandeur to sustainable, green and technologically advanced living spaces.

As the luxury real estate market continues to grow, developers must keep up with the changing needs of the wealthy,” Jain said.