Residential real estate prices move north
The residential housing segment in the country continued its northward march, with Chennai leading the various urban centers in registering the highest increase in property prices in the quarter ending March 2022. This also reaffirms a sustainable recovery of the residential real estate sector.
Residential property prices have shown an upward trend to varying degrees in the country’s top eight cities, according to recent analysis by online real estate major PropTiger.com, part of REA India which owns also Housing.com and Makaan.com. The rise in property prices is an important factor as it reflects the overall dynamism of the sector, which is important for all stakeholders, be it developers, construction material suppliers, the public treasury or the end buyer.
The report clearly highlights several facts suggesting a definite recovery in the residential real estate sector, which in all likelihood is likely to continue in the months and quarters to come. These pointers include the increase in overall demand in various segments in different major cities of India as well as efforts by developers to make affordable and mid-range homes available to potential buyers.
The report titled “Real Insight Residential – January-March 2022” covers developments in the residential real estate sector in Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region, National Capital Region of Delhi and Pune.
On an all-India basis, no less than 70,623 units were sold during calendar Q12022 compared to 66,176 units during calendar Q12021, registering a 7% year-on-year growth. More importantly, the improvement in terms of new supply was much higher with year-over-year growth of 50% over the same period. A total of 79,532 units were launched in the first calendar quarter of 2022, compared to 53,037 units in the first calendar quarter of 2021.
The demand matrix also showed that the bulk of buyers preferred residential units in the range of Rs 45-75 lakh. The cities of Mumbai and Pune recorded the largest share of the housing sales pie, with their combined share accounting for 56% of overall sales during the period.
Another important factor suggesting an improvement in overall sentiment was the rise in preference for properties under construction. Unlike the recent past, homebuyers have returned to showing interest in properties under construction due to the cost advantage over ready-to-move-in properties.
Previously, most potential buyers opted for move-in ready properties due to a lack of confidence. This trust deficit is slowly giving way to buyer confidence as developers have become more concerned with meeting delivery deadlines. As a result, several developers, especially the more reputable names, are actually able to command a bounty on their developments being built.
Although much of the rise in residential unit prices can be attributed to the rising cost of building materials, it also reflects the increased demand for housing in different market segments.
According to the analysis, the largest increase in property rates was seen in Chennai, where on average residential unit prices increased by 9% on a yearly basis, followed by Pune and Ahmedabad, which recorded an increase. average price increase of 8%. percent.
The main factors responsible for the increase in demand as well as the increase in residential property prices are the overall improvement in consumer sentiment due to the lower incidence of coronavirus cases and the change in the consumer perception of home ownership under the impact of the pandemic . With the overall economy improving and more companies hiring new employees, aspirations also began to rise. In addition, the extensive use of digital platforms and social media by developers to market their projects has helped attract young people into the housing sector, both for investment and for end use.
On the other hand, the high number of unsold homes remains a concern for developers. This, however, can be attributed to an oversupply of units at the wrong price points and also units, which may never see the light of day. Among the cities, Delhi NCR has the highest inventory overhang, while Bengaluru and Kolkata recorded the lowest. These stocks will decline only gradually as the residential real estate cycle continues its upward march.
While things are getting a bit tougher, with the interest rate cycle picking up in the wake of the RBI’s interest rate hike, housing in India would require additional support from the government to keep the economy going. attraction of buyers. An extension of the PMAY-Urban program beyond September 2022 and section 80EEE would be the right step in this direction.
(By Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com)