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“Honey, I Shrunk the Flat!” – Budget Housing Sizes See Most Decline in 5 Years


Anuj Puri
Chairman ANAROCK Property Consultants

  • Properties within INR 40 lakh budget see 23% fall in average sizes – from 750 sq. ft. in 2014 to 580 sq. ft. in 2018
  • Avg. property sizes in top 7 cities decline by 17% in 5 years; from 1,390 sq. ft. in 2014 to 1,100 sq. ft. in 2018
  • Bangalore sees least size reduction at 12%, MMR tops with 27% average decrease

When it comes to housing, size matters for all kinds of reasons. The added floor space of larger homes definitely spells comfort, convenience and family scalability, every additional square foot either comes at a higher price or pushes available options further away from the central regions of a city.

Millennial homebuyers have already made it clear that they prefer affordability coupled with good location over larger-sized homes in the far-flung suburbs. Simultaneously, developers are intent on making their housing projects more pocket-friendly for a higher customer base.

As a result, the top 7 Indian cities collectively saw average apartment sizes shrink by nearly 17% between 2014 and 2018. However, this has not been a uniform phenomenon.

  • Among the top cities, MMR topped the list with a 27% average decrease in apartment sizes – from 960 sq. ft in 2014 to 700 sq. ft. in 2018.
  • Bangalore saw least decline in average property size at around 12% in five years. The current average apartment size in Bangalore is 1,260 sq. ft. Interestingly, prior to 2017, the average sizes in Bangalore fluctuated by merely 1-2% y-o-y; in 2018, they dropped by over 12% against the preceding year.
  • Hyderabad currently has the highest average property sizes about 1,600 sq. ft., Property buyers in Hyderabad have traditionally preferred large-sized homes, which dovetails favourably with the fact that property prices here have been more realistic than in most other cities.

Pan-India Average Apt. Sizes: 2014 vs 2018

Cities Avg. Sizes (2014) Avg. Sizes (2018) % Change
NCR 1,485 1,250 -16%
MMR 960 700 -27%
Bangalore 1,430 1,260 -12%
Hyderabad 1,830 1,600 -13%
Chennai 1,290 1,100 -15%
Pune 960 750 -22%
Kolkata 1,230 950 -23%
Pan-India 1,390 1,160 -17%

Source: ANAROCK Research

A major factor contributing to the shrinking apartment sizes across most metros is the rising demand for budget-friendly housing. With property prices going overboard in most metros, developers have been reducing sizes to align their offerings more with the actual homebuyer demand.

The Millennial Connection


Another reason for shrinking apartment sizes is that most millennial homebuyers are averse to investing in both the higher maintenance costs and extra efforts that larger properties entail. However, this is not their only reason – Millennials actually prefer to own smaller homes.

Millennials attribute high value on location flexibility and do not get ‘tied to’ neighbourhoods the way the previous generations did. Frequent ‘switching’ of cities is rapidly becoming the new normal for millennials on the lookout for faster career growth. Also, they’re in no hurry to marry and start families.

Live-in relationships are becoming more popular and socially acceptable, and more and more young people give high priority to career growth before deciding to marry and ‘settle down. The average age of marriage in India has increased from age 21-25 in previous years to age 30-35 in recent years.

Compact housing is the fastest seller on the resale market, so such homes give millennials both locational and financial flexibility while simultaneously allowing them the security and investment advantages of homeownership.

The increasing preference for smaller homes by what is arguably India’s most solvent age demographic contrasts sharply with the onus on larger flats in previous years. It took developers quite a while to understand and accept it – one of the main reasons why there is so much unsold mid-range housing inventory on the market today.


Segment-wise apartment reduction

  • The maximum reduction in average property sizes was seen in the budget housing segment priced < INR 40 lakhs. The average size of homes priced below INR 40 lakh was 750 sq. ft. in 2014, and is reduced by 23% in 2018.
  • Interestingly, apartment sizes in the luxury housing segment (priced above INR 80 lakh) also saw a 20% reduction over the last 5 years. The average size of properties in this segment was 1,830 sq. ft. in 2014, which came down to 1,460 sq. ft. in 2018.
  • Mid-segment housing priced between INR 40 – 80 lakhs saw the least size reduction of 17% – from 1,150 sq. ft. in 2014 to around 950 sq. ft. in 2018.

The reduction in flat size has invariably been achieved by the elimination of extra balconies – and in many cases all balconies – and better apartment designs that allow more efficient use of smaller spaces.