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In 2024 and as of January 2025, the only cities with any sizable activity in housing segment are MMR and Kolkata. In both these cities, nearly 31 per cent of the total upcoming supply is priced below Rs 40 lakh
Representative Pic/Sameer Markande
The affordable housing segment, once the star performer of India's real estate market, has seen a significant decline in recent years, with the Mumbai Metropolitan Region (MMR) being one of the few remaining pockets of activity. The upcoming Union Budget 2025 could turn the tides for the housing sector.
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Once driven by the Union Government’s ‘Housing for All’ program and supported by lower GST rates and tax breaks, the segment accounted for nearly 40 per cent of total housing supply in 2018 and 2019. However, today, affordable housing is struggling for survival, and the upcoming Union Budget 2025 holds huge importance for its revival.
Affordable housing in MMR
While cities like Bangalore, Hyderabad, and Chennai have witnessed an almost complete erosion of affordable housing supply, MMR stands out as one of the few regions still offering substantial options in this segment. As of January 2025, nearly 31 per cent of MMR’s upcoming residential supply is priced under Rs 40 lakh, providing hope for first-time homebuyers, as per ANAROCK.
MMR’s resilience in this segment stems from its vast and varied housing landscape, including peripheral areas like Thane, Navi Mumbai, Kalyan-Dombivli, and Mira-Bhayandar. The MMR continues to attract developers and buyers due to relatively lower land costs, infrastructure growth, and connectivity improvements. However, even here, rising input costs and dwindling profit margins are pushing developers towards high-end and luxury projects.
Pandemic fallout and shifting demand
The COVID-19 pandemic profoundly changed housing preferences. In any case, as the nation awaits the Union Budget 2025 of the Modi government’s third term, there is no doubt that the stakes for the languishing affordable housing sector are very high. In fact, it is hoped that Union Budget 2025 will be a resuscitating turning point for it, stated ANAROCK.
The demand for larger, multifunctional homes with lifestyle amenities soared as remote work and online schooling became the norm. For many Indians, the concept of starting with small homes and upgrading later lost its appeal. In MMR, too, buyers increasingly sought bigger units, reducing the demand for smaller, budget-friendly homes.
This shift is reflected in MMR’s affordable housing supply share, which fell sharply from its peak in 2018-19. The pandemic also forced the segment’s target audience, consisting of blue-collar workers, lower-paid workforces and those just starting out on their careers, to be severely cash-strapped and obviously, buying homes did not feature among their immediate priorities, stated ANAROCK. Instead, the rental market picked up after the pandemic abated and businesses sent out their 'return to office' call.
Shrinking supply
In 2024 and as of January 2025, the only cities with any sizable activity in this segment are Kolkata and MMR. In both these cities, nearly 31 per cent of the total upcoming supply is priced below Rs 40 lakh, as per research by ANAROCK. Bangalore at the same time is devoid of any supply in this segment. Hyderabad and Chennai are seeing only a minimal 2 per cent supply share.
Pic/ANAROCK
NCR has witnessed a drastic reduction in its share of affordable housing, falling from 62 per cent in 2020 to only 11 per cent in 2024. In terms of both demand and supply, NCR is showing far greater interest in high-end and luxury properties, which is evident from the rise in the value of inventory sold during the year. Residential apartments sold in the NCR primary market in 2024 are estimated to be valued at Rs 90,000 cr, which is 32 per cent more than 2023. In value terms, NCR is second only to MMR, ANAROCK stated.
PMAY and MMR’s affordable housing prospects
The Pradhan Mantri Awaas Yojana (PMAY) remains a key driver of affordable housing in MMR, with significant progress since its launch in 2015. According to data by the Ministry of Housing and Urban Affairs, nearly 118.64 lakh homes have been sanctioned nationwide as of January 20 this year and over 90.22 lakh units have been completed, and nearly 112.50 lakh have been 'grounded'.
In terms of the financials, nearly Rs 200,000 cr of central assistance has already been committed, ANAROCK stated. However, the scheme faces challenges such as the lack of digitised property records, which hinders access to interest subsidies and other benefits.
To revitalize affordable housing in MMR, the government must address these bottlenecks. Introducing new low-cost, sustainable construction technologies and improving awareness of PMAY benefits can significantly boost the segment.
Any announcements that Union Budget 2025 will make in context with affordable housing will doubtlessly involve PMAY, said ANAROCK.
What to expect from the Union Budget 2025
The Union Budget 2025 is anticipated to play a pivotal role in reviving the affordable housing market. Any substantial announcement for the affordable housing segment in the upcoming Union Budget 2025 can strengthen the trend and give affordable housing a seriously needed leg-up, ANAROCK stated.
MMR continues to hold promise as a critical hub for affordable housing, but its future depends on policy interventions and market dynamics in the months to come.
Even if such measures don't initiate a full-blown revival, they can at least improve this segment's overall prospects. Finally, a healthy housing market caters to a broad range of buyers and doesn't favour just one segment.
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