The increased supply of ‘affordable’ housing and the demand for it has improved volumes for developers, but this has also meant that the rise in values has been significantly less.
Balakrishna Hegde, former president of CREDAI, Bangalore, points out that while volume demand is up by 50% to 60%, the rise in value has only been about 25%.
Affordable housing does not yield the 50%- 100% margins that developers were used to before the economy slowed down. And even in higher priced projects, developers have been forced to cut their margins to draw in buyers.
There are isolated instances of developers, riding the marginal recovery in the economy, reverting to high-margin premium housing, but the big immediate hope is still affordable housing, flats up to about Rs 25 lakh.