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There is an oversupply-like condition in the affordable housing segment. But with the kind of demand for these, the situation may soon be over unless people longing to buy that dream home of theirs make a quick decision
Prabhakar Sinha
If you are planning to buy a house, this is the right time. The economy is coming out of the recession and is expected to grow at 8.5% in the current financial year. But as the hangover of the downturn is yet to recede completely, property prices in upcoming areas are still quoting at the rates prevailing during the slowdown period.
Prices of apartments in areas like Noida, Greater Noida, Noida Extension, Raj Nagar Extension and Indirapuram have remained stagnant over the last six months. In fact, prices in these upcoming areas are quoting at substantially lower rates than the prevailing prices in 2008 - before the slowdown had hit the economy. However, as the demand has grown substantially in the last couples of months, developers are considering an increase in prices.
To beat the downturn, the developers introduced the idea of affordable housing, which brought the prices of apartments in the NCR within the grasp of the middleclass buyers. In order to bring down the cost, and consequently the selling price, the developers increased the density of apartments in the affordable segment of development.
But to maintain the quality of living in the affordable housing developments, Manoj Gaur, director of Gaursons, says developers like him introduced high-rise construction, which enabled them to retain a high proportion of green areas. Gaur, whose company is developing a township, Gaur City, in Greater Noida, popularly known as Noida Extension, said that while the launches of affordable housing helped end users to own their own home, on the one hand, they also contributed to the revival of the real estate sector in the country on the other hand.
The CMD of Supertech, which is constructing a couple of townships, Eco Village I and II in Noida Extension, said that there is a huge demand in affordable segment. Though these apartments are termed as affordable housings, he says, they are in no way inferior to the other constructions, which have no such appellations. He said that as most affordable houses in Noida and Greater Noida are being developed in large townships, they have better amenities than even luxury condominiums developed on comparatively smaller plot. Most of these affordable houses developed in townships of around 100 acres have a number of playgrounds, club houses, water bodies, hospitals, schools, colleges and educational institutions. Because of the highrises, around 80% of total ground area in these townships are left as open areas.
But, as a number of developers have launched a large number of such projects in the last one year, there is a huge supply of these apartments. This has created an oversupply-like condition for the time being. Gaur says that with the kind of demand they are experiencing in the affordable segment, the oversupplylike situation would soon be over. He said this is the first time when houses are really being developed for the middle class in metro cities. So far, upper-middle class or affluent people used to buy houses in these cities.
According to housing finance major, HDFC, the affordability factor, which is measured as the number of years' income of an average middleclass person required buying a house, has declined to 4.7 years in 2010.
In 1995, it was 22 years. Later, as the income of the average middleclass person rose sharply and the prices of apartments declined, the affordability factor declined to 11.1 years in 1997 and further to 5.9 years in 2000.The affordability further improved in 2004,when according to the HDFC index, only 4.3 years' income of an average middleclass person was required to buy a house. But, later, as the average property (twobedroom house) prices in metro cities shot up from Rs 14 lakh in 2004 to Rs 32 lakh in 2008,the affordability level worsened. By 2008, according to HDFC, one needed to spend five years' income to buy a house in 2008; but, in 2009, as the property prices fell, the number of years' income required to buy a house declined to 4.5 years in 2009. Now, as the demand has come back, there are chances that prices may start firming up. According to global realty consultancy firm, Cushman and Wakefield, "The market witnessed new launches in the mid-segment category on the back of a strengthening economy and revival of demand leading to appreciating capital values in the region."
The suburban locations of the NCR further expanded their horizons, with planned and improving infrastructure initiatives that resulted in the emergence of new residential corridors, such as Greater Noida Sector 1,2 and 4,which is also known as Noida Extension, Besides them, a number of new locations along Yamuna E-way, NH 24 and NH 58 have come up. The improvement in connectivity of these far-flung areas to the main city has also helped in expanding the horizon of the city.
As economic health will improve, employment opportunities will also improve. So, those that are waiting for prices to fall further may get disappointed. Therefore, if you are planning to buy a house for your own use, it is the time to take the plunge. FOCAL POINT
As the demand has come back, there are chances that prices may start firming up Those who are waiting for prices to fall and postpone their decision, may have their plans upset As the health of the economy will improve, the employment opportunities will also improve. This will give fillip to the demand
Courtesy ET Realty Dtd. 13-08-2010
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Courtesy ET Realty Dtd. 13-08-2010

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