Summary of this article
Prices rise up to 12 percent
Developers gain viability, buyers face higher costs
Supply may improve across key Haryana cities
The Haryana government has approved a revision that changes the pricing framework for the affordable housing projects, which increases allotment rates by 12 per cent. While the move is expected to revisit the stalled developments, it will also encourage fresh supply. It is likely to make homes quite costlier for buyers. This affects the low-income and middle-income segments.
The revision is being made under the state’s Affordable Housing Policy, 2013. This policy regulates pricing for affordable group housing projects (AGH). These updated rates are applied to projects where allotment has not been completed; this is in addition to the allotments that are in the queue. For ongoing applications where buyers have applied but the allotments are pending, applicants will be required to pay the difference of the revised rate in order to proceed. Those who are unwilling to accept this increase will be getting a full difference without any deductions.
The decision is a response to demands made by the developers, who argued that the rising land costs, construction expenses, and the labour changes have made the existing rates seem unprofitable. Industry stakeholders have maintained that without the revision, affordable housing projects are becoming unsustainable. This leads to a slowdown in the new launches.
Under the revised structure, cities like Gurugram will be seeing an increase in rates from around Rs 5,000 per square foot to nearly Rs 5,575 per square foot. Similarly, in Faridabad and Sohna, the rates could go up to Rs 5,450 per square foot. In high-potential towns and medium-potential towns, prices may rise up to Rs 5,050 per square foot. While in low-potential towns, they can touch Rs 4,250 per square foot.
As stated by officials in a Hindustan Times report, the current market realities will need to incentivise the developers to re-enter the affordable housing market. In recent years, the sector has witnessed a noticeable decline in the affordable housing market. Only a few projects have been launched in these localities. Developers have increasingly shifted their focus to the premium and luxury housing segment.
The government aims to make affordable housing projects a viable option; they have allowed this price hike, which may boost the supply. This could also help in easing the shortage of budget homes in urban centres such as Gurugram and Faridabad. These areas attract more demand from first-time buyers and salaried professionals.
This price hike also raised concerns about affordability in a market that is already expensive and dense. A hike in property rates indicates an overall increase in the costs of properties for the investors and homebuyers. However, this rate hike is expected to increase new supply and revive the stalled projects.
