The real estate developers in Hyderabad are facing significant challenges in acquiring land and constructing affordable housing projects due to the soaring land rates. As a result, sales in the affordable housing category have been severely hampered, with both supply and sales declining by 50% in just one year.
Anarock Property Consultants reported that during the first half of the fiscal year (H1) 2022, 1,460 affordable houses were sold in Hyderabad. However, this number dropped significantly to 720 in H1 2023. The new supply of affordable housing units also witnessed a sharp decline from 1,220 to 685 during the same period.
Just a few years ago, purchasing a 2 BHK property in Hyderabad was attainable for middle-class buyers at a cost of less than Rs 50 lakh in most areas. However, the scenario has drastically changed, and the cost of a 2 BHK property within the city limits now ranges from Rs 70 lakh to Rs 90 lakh, making it increasingly difficult for salaried employees to afford a home. Even a 3 BHK property in prime areas now costs no less than Rs 1 crore.
Real estate developers in the city point out that various factors, including land rates, registration charges, construction materials, and labor costs, have all increased since the Covid-19 pandemic began, contributing to the surge in flat rates across the State. Earlier, the cost per square foot for flats ranged from Rs 3,500 to Rs 4,000, but completing a project for less than Rs 6,000 per square foot has now become nearly impossible.
The rise in real estate prices has led to a significant decrease in demand for affordable housing, with many potential buyers postponing their purchase decisions. Developers are now shifting their focus to mid-range, premium, and luxury projects, which are more financially viable in the current market.
The challenges faced by both buyers and developers in the affordable housing category extend beyond the impact of the pandemic, making the road to affordable homeownership increasingly difficult for many in Hyderabad.
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