Mid-segment housing sees rising demand

Bengaluru Demand for affordable housing is expected to remain steady in the current fiscal year after the subdued phase owing to rise in interest rates by the Reserve Bank of India. According to industry players, buyers are looking for purchasing homes in the Rs 30 lakh- Rs 90 lakh range across cities.

“If you see, demand for homes in the price range of Rs 30 lakh- Rs 90 lakh remains steady as interest rate is not only determinant for purchasing a home. At Provident Housing, we see demand remaining strong in the current financial year,” Mallanna Sasalu, Chief Operating Officer of Provident Housing told the Bizz Buzz.

Provident Housing is the fully owned housing arm of Bengaluru-headquartered Puravankara Ltd.

Notably, demand for affordable housing has dipped since late last year as the central bank started to raise the policy rates. According to SBI’s Economic Research report, on an average, the proportion of home loans up to Rs 30 lakh in total loans disbursed has declined to 45 per cent during January-February 2023 from around 60 per cent of disbursals in June 2022 quarter.

However, the share of home loans above Rs 50 lakh has increased from 15 per cent to about 25 per cent of the fresh disbursals during this fiscal. “This indicates that the demand for housing loans by people at the lower end of the strata, who take loans for affordable housing sector, has been noticeably hit,” Soumya Kanti Ghosh, Group Chief Economic Adviser of SBI has said.

Similarly, real estate consultancy firm ANAROCK Research, share of affordable homes in the overall housing units sold in 2022 fell to 20 per cent from 40 per cent in 2018. This reflected falling demand for affordable housing over the last few years.

“With demand for affordable housing shrinking over the last few years, developers have also changed gears to match demand and launched more projects in the mid and premium segments,” Anuj Puri, Chairman of ANAROCK Group has said.

While demand for houses in the range of Rs 30 lakh is falling, mid-segment housing is witnessing rising demand. Moreover, luxury housing with a price tag of Rs 1 crore and more is also seeing good traction in the market place. However, sources in the know said demand for affordable housing is likely to come back as there is an anticipation of RBI taking a long pause with regard to policy rates. Moreover, some analysts are expecting a rate cut by the central bank towards the end of fiscal year.