Middle income housing of 900-1,200 sq ft accounts for 40% of housing demand: Report

With affordable housing set to drive the Indian real estate market for the next decade, the maximum supply and demand is currently being driven by the 900-1,200 sq ft segment. The 300-600 sqft apartments that also attract credit linked subsidies for those with a salary level of up to Rs 6 lakh is expected to soon be transacted in the formal market, showed a Magicbricks report.

According to Magicbricks, for the first time there is sync between demand and supply of housing in the country owing to slow demand movement and rising levels of completed stocks entering the market. Demand has now rationalized and supply in the market is now in various stages of completion.

The report highlighted that a major chunk of supply and demand currently was in the 900-1,200 sq ft property that would classify as middle income group (MIG) 1 and 2 under the government categorization for CLSS benefits. This segment has accounted for more than 40% of the demand in urban India in the January-March 2017 quarter. The sizes of 1,350-1,500 also accounted for about 14% of demand.

The report also stated that between the 300 and 450 sq ft, the latter was in greater demand and in both cases demand and supply were in sync. But apartments with a built-up size of 600 sq ft was more popular than the smaller sizes. It accounted for a healthy 11% demand across cities.

"Government policies such as Housing for All (HFA), Affordable Housing, CLSS and Pradhan Mantri Awas Yojana (PMAY), have made affordable housing the buzzword in the market," said E Jayashree Kurup, Head – Editorial and Advisory, Magicbricks. "We are in transition and affordable housing is expected to dominate the markets for the next five years at least."

According to Magicbricks, the 300 sq ft size was lowest priority for most cities like Noida, Pune, Hyderabad, Gurgaon, Bengaluru and Ahmedabad, while the 450 sq ft size fared much better.

On the other end of the spectrum was the 2,200 sq ft and above which ranked high only in Gurgaon. Apartment sizes of 600-1300 sq ft were the most supplied categories across most cities. However, there are multiple factors that determine the supply profile. In cities like Faridabad and Ahmedabad, affordability of larger sizes like 1,000-1,200 sq ft because of lower per sqft cost determined supply profiles. In expensive cities like Delhi, Navi Mumbai and Mumbai, smaller sizes were in supply, the report said.

The supply of smaller sizes was missing in Delhi for a long time. However, redevelopment in lower income group colonies such as Uttam Nagar and Chattarpur have ensured that the supply of these properties has also come into the formal market. The Gurgaon market is an aberration where the most supplied categories were sizes 1,500-1,650 sq ft, with the 3 BHK topping the chart.

A further analysis of the demand profiles showed that 600-1,000 sq ft size apartments topped demand in most cities. This was directly linked to the purchasing power. Gurgaon, for instance, posted maximum demand for 1,000 sq ft houses and the next was 1,350 sq ft. This preference for larger units is linked to the purchase capacity of professionals living and working in the city.

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