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Hyderabad's affordable housing market slumps amid soaring prices
Developers throughout the city are facing mounting challenges in acquiring land and constructing low-margin mass housing projects, as land prices have soared.
Hyderabad: Developers throughout the city are facing mounting challenges in acquiring land and constructing low-margin mass housing projects, as land prices have soared. Consequently, sales in the affordable housing sector have been severely affected. Surprisingly, within a year, both the supply and sales of such homes have plummeted by 50 percent in Hyderabad. According to Anarock Property Consultants, the number of affordable houses sold in the first half of the fiscal year (H1) 2022 was 1,460, but this figure dropped to 720 in H1 2023. Similarly, the new supply of affordable units saw a significant decline from 1,220 to 685 during the same period.
A mere three years ago, middle-class buyers could fulfill their dreams of owning a flat or independent house in Hyderabad, with 2 BHK properties costing less than Rs 50 lakh in most areas. However, within the city limits, a 2 BHK now costs around Rs 70 lakh to Rs 90 lakh. Salaried employees find it exceedingly difficult to afford a home at these inflated prices. Moreover, a 3 BHK property in prime areas is now unavailable for less than Rs 1 crore.
Realtors in the city have highlighted that land rates, registration charges, construction materials, and labor costs - all essential components of apartment construction - have increased since the onset of the Covid-19 pandemic. These factors have collectively contributed to the surge in flat rates across the State.
Before 2020, the cost per square foot for flats ranged from Rs 3,500 to Rs 4,000, depending on the locality. However, completing a project for anything less than Rs 6,000 per square foot has become nearly impossible, according to developers. They also underscored that reducing construction costs could potentially lead to a decrease in flat prices.
Anarock's research indicates that a significant portion of affordable housing buyers are postponing their purchase decisions due to the steep increase in real estate prices over the past year. This decrease in demand is also reflected in the new supply of affordable housing, as developers are now focusing on mid-range, premium, and luxury projects.
Anuj Puri, chairman of Anarock Group, emphasized that the challenges faced by both buyers and developers in the affordable housing category extend beyond the impact of the pandemic
