Homes with constantly increasing prices every day
People turning towards spacious homes after Covid
Increase in land prices, construction costs is another reason
The real estate market is booming nationwide. From the price of land to the rates of houses, everything is significantly increasing. Demand is also stable. However, only budget homes (less than Rs. 40 lakhs) seem to be facing unfavourable conditions.
Contrary to the progress in the real estate sector, this segment is deteriorating. Daily home sales and inquiries are decreasing. This situation is prevalent in seven cities across the country, including Hyderabad. Mainly, budget homes have seen a decline in sales and inquiries. While the overall property market had shown improvement during the past five years, only budget homes have witnessed a decline. From 2019 to 2023, the sales of budget homes significantly increased. But from 2019 to 2023, the sales of budget homes decreased from 38% to 19%. In the first quarter of 2024, they are at only 20%. Sales of homes, not just budget ones, have dropped. From 2019 to 2023, the launch of budget homes decreased from 40% to 18%. Mainly, this situation began after Corona. With Corona’s impact, people confined to their homes started looking for larger, more comfortable houses, which affected budget homes negatively.
Luxury homes play a crucial role in the real estate market. Post-Corona, their demand increased significantly, affecting sales and inquiries positively. Branded developers heavily invested in constructing these homes in superior locations, raising their prices substantially. From 2019, luxury home sales, which were at 7%, increased to 25% by 2023. Now, in the first quarter of this year, it’s at 21%. There’s more growth potential this year, attracting investors towards the luxury segment. Nationwide, this segment is flourishing, especially in Mumbai. However, in Kolkata, the scenario is different. There, budget homes are still in demand.
For budget homes to regain their former glory, the government needs to intervene correctly. Proper measures should be taken to encourage the construction of affordable homes. Developers need proper incentives. In reality, they introduced the Credit Linked Subsidy Scheme in 2015. However, it was not reintroduced in 2023. There’s a need for such schemes to be reintroduced, focusing on providing benefits to the end-user. Currently, experts are advocating for the acquisition of land necessary for constructing budget homes to be handed over to the end-user, indicating a change in approach.
In this year’s budget, the central government announced a new housing scheme for middle-income groups in urban areas. However, no details have been revealed yet. Additionally, in August last year, they announced a relief package for low and middle-income groups on home loans. But, no concrete steps have been taken regarding this either.
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