Affordable homes lose buyer interest

Affordable housing, which was mooted by several developers to help them tide over the realty slowdown, has seen absorption levels go down as customers moved up the value chain.

The decline in affordable housing led to the uptake in the mid-segment absorption during the second half of 2009 across several cities, according to a study released by real estate consultants PropEquity.

Cities such as Mumbai and Gurgaon registered a decline in unsold inventory as the housing sector revived, especially the mid-income segment.

Prices in the national capital region remained stable and witnessed minor corrections. There was a decrease in prices in cities such as Noida which led to higher absorption levels.

Chennai and Bangalore recorded minor upward pricing trends
despite high levels of unsold inventory.

The study was conducted across 13 cities — Delhi, Gurgoan, Noida, Greater Noida, Ghaziabad, Faridabad, Mumbai, Navi Mumbai, Thane, Chennai, Bangalore, Chandigarh and Mohali.

At least nine cities showed a rising trend towards mid-segment housing, while for new launches, six cities showed a movement towards the mid segment.

The consultant believes that the uptrend can be attributed to the return of buyer confidence in the residential market.

There was an increase in prices in the affordable segment in Mumbai after a price correction phase in second and third quarters of 2009. However, the mid-segment has registered stable pricing in the financial capital.

Pune witnessed the highest residential activity in terms of new launches and absorption. It saw a series of new launches adding 5,300 units in the second quarter of 2009.

The trend of absorption shows the share of mid-segment increasing from 47% in the fourth quarter of 2008 to 57% in 2009.
In Gurgaon, absorption levels bounced back to their highest levels seen in early 2008.

Both the mid- and higher segments experienced strong growth as 8,000 units were absorbed in a year.

DLF, the largest real estate developer in the country, said it has seen a strong revival in the luxury housing segment in Gurgaon and Delhi. Sales of affordable segment in Gurgaon declined in the second half of 2009 and prices have corrected to the tune of 10-15%.

In the third quarter of 2009, Noida absorbed 15,500 residential units with correction of prices in both the affordable and mid-segment categories due to oversupply.

The pricing has led the investor community to invest in Noida market, making it the most preferred destination among the national capital.