Half of unsold ready-to-move-in property in Mumbai affordable

Half of unsold ready-to-move-in property in Mumbai affordable

Given the government incentives for developers and homebuyers, both demand and supply increased in the segment. (Photo: Bloomberg)

A recent data released by Proptiger.com, indicates that developers had an unsold stock of over 2.93 lakh units till July 2019 in Mumbai Metropolitan Region (MMR). Out of these, over 1.41 lakh units (over 48% of the stock) are priced up to 45 lakh. Proptiger.com is a real estate portal owned by Elara Technologies Pte Ltd that also owns other realty portals like Housing.com, Makaan.com and FastFox.com.

While the mid- and high-end segment in the real estate sector is especially struggling to find buyers, the affordable or low-cost housing is the only segment which is witnessing traction from both buyers and developers after several incentives and schemes announced by the government started focusing on the segment.

The latest in a series of government incentives was the 20,000 crore stress funds announced by finance ministry particularly to provide last-mile liquidity support for affordable and mid-segment housing projects. Prior to that, in the Budget 2019, government announced additional tax deduction of 1.5 lakh on interest paid on home loans taken for buying an affordable house. In total, from financial year 2019-20, a home buyer can claim a deduction of up to 3.5 lakh against interest paid on home loan taken to buy an affordable house.

Earlier this year, government also reduced the rate of goods and services tax (GST) from 5% to 1% for under-construction affordable housing projects, effective 1 April 2019. While Budget 2018 expanded the scope of affordable housing by increasing the size of units to be included in the segment, in March 2017, the government granted it infrastructure status. Budget 2016 allowed developers to avail 100% deduction on profit made in the low-cost segment, and a year before, in 2015, a credit-linked subsidy scheme—Pradhan Mantri Awas Yojana—was announced where a homebuyer can avail a subsidy benefit of up to 2.67 lakh.

Given the government incentives for developers and homebuyers, both demand and supply increased in the segment. However, projects within city limits or in an already developed locality are the most sought after by the homebuyers, but such projects are limited due to high land values in cities. Projects that are in far-off areas are witnessing lukewarm response from homebuyers.

According to Proptiger.com’s findings, “majority of the unsold stock in the MMR is concentrated in Thane West, Dombivali, Neral, Mira Road, Panvel, Virar and Chembur. While the largest number of 2BHK and 3BHK homes are available in Thane West (13,766 and 4,306 units respectively), Neral has the biggest concentration of 1BHK homes (8,599 homes), a widely popular choice among Mumbai property buyers.” However, supply side stake holders are hopeful that demand will further improve during the upcoming festive season.

If you are planning to buy a house in an affordable housing project, be careful about the location and ensure that the area has basic infrastructure in place. Also, evaluate the financial capability of developer to execute the project, before taking the leap.