NEW DELHI Property prices are likely to appreciate by 5-10 per cent next year while housing sales are likely to reach pre-Covid level soon, said property consultant Anarock.
In 2020, housing sales stood at 1.38 lakh units, down 60% from the previous peak of 2014. This large-scale decline indicated that the Indian residential market had bottomed out in 2020 and was likely to enter a long-term upcycle from 2021 onwards. During January-September 2021, 1.45 lakh units were sold, which is 5% higher than all of last year, said Anarock. "New supply and sales may reach 2019 levels by the next year i.e. 2022. Interest rates may start inching up from H2 of 2022. Prices may appreciate in the range of 5-10%," said Anarock Chairman Anuj Puri
More demand for houses priced between Rs 40 lakh and Rs 1.5 crore
With work from home and online schooling becoming the new normal, there was a high demand for larger houses and as a result, mid-segment (units priced between RS 40 - 80 lakh) and high-end (units priced between Rs 80 lakh – Rs 1.5 Cr) did exceptionally well. Altogether, around 65% of the supply between Jan – Sep 2021 came in these segments. As per Anarock's latest consumer sentiment survey, there was a clear rise in the preference for properties priced over Rs 90 Lakh. During the first wave, 27% of the respondents preferred properties priced over Rs 90 Lakh, which increased to 38% during the second wave.
Data from property consulting firm Liases Foras shows a 105 per cent rise in sales for properties priced in the Rs 50-lakh to Rs 1 crore bracket in the first half of financial year 2022 when compared the to year ago period
Ready-to-move in most preferred option
2021 also saw the demand for ready-to-move-in apartments surge in almost all cities. It became a preferred segment in order to avoid risks associated with under-construction properties.Sales in the Rs 1-2 crore bracket saw an 88% increase in the same period.
"After the pandemic, there has been a surge in ready to move in inventories. Also, there was good take on the luxury segment, especially those in ranges of 10 cr plus bracket. ..We have primarily witnessed in states like Maharashtra where the stamp duty benefit was available for the first quarter of 2021 that there was good demand for ready to move in, under construction, and pre-launches," said Dhaval Ajmera, Director of Ajmera Realty & Infra India.
Century Real Estate, a South India-focused realtor, clocked in the highest monthly residential sales ever in October thanks to the demand for luxury projects and ready-to-move-in homes. The company achieved a 38% Y-o-Y growth in H1, and a 32% sales growth on a month-on-month basis. The company’s luxury projects contributed 53% of the sales in October, followed by the aspirational segment at 27%.
Top listed developers scored record sales in 2021
The top listed and non-listed developers with good corporate governance practices, financial accountability, trust, and brand witnessed very good sales.
Realtor Brigade Enterprise saw its sales bookings grow by 59% to Rs 1310 crore in the Apr-Sep 2021 while Godrej Properties' sales bookings jumped 18% to Rs 3,072 Cr in the same period. Prestige Group’s Q2 FY22 sales bookings were up 88% Y-o-Y while Lodha sold properties worth Rs 3,000 crore in Apr-Sep 2021; on track to reach the Rs 9,000 Cr target for FY22
Demand for affordable housing slows down
Surprisingly, the affordable housing segment slowed down this year because of pent-up supply. "Significant supply addition ( 1.7 lakh units) from 2019 till Q3 2021 (1/3rd of overall new launches). As a result, developers throttled back affordable housing supply to take stock of the situation and focus on execution rather than adding new projects," said the report.
Moreover, an affordable housing development is a long gestation, low margin – high volume business - and in the current market conditions, developers are looking at quick execution and exit, explained Anuj Puri, Chairman of the Anarock group.
Also, COVID-19 impacted the livelihoods of affordable segment homebuyers, resulting in reduced demand.
People want larger homes, second homes outside cities in demand
In the past two years, demand has skewed towards homes large enough to accommodate the new WFH and e-schooling realities, and the average sizes of new unit launches have risen by 26%, noted Anarock.
“We are witnessing an unprecedented number of genuine buyers walking into our projects in the recent months, along with much higher conversion rates into bookings. Post the lockdowns, we are seeing consumers in Bengaluru looking to invest in larger & better quality homes/plots from trustworthy Grade A players. We are also seeing an overall buoyancy in the market among customers and channel partners alike since the waning of the second wave, which culminated in record sales for us in the festive season,” said Ajay K Singh, VP, Sales at Century Real Estate.
Villas, farmhouses and second homes have been in demand as buyers looked to purchase properties that offered superior social distancing and lower infection risk in less populated, greener environs. Also, with WFH being the new normal, people could work from anywhere. "Peripheries witnessed increased traction with more than 60% launches in the further suburbs," said Puri.
Home loans have rebounded
There has also been a rebound in home loan demand in the last quarter of the current calendar year. “2021 was the year of the turnaround after the pandemic for home loans. Despite reversals from the second wave of the pandemic, the year has been a time of growth," said a report by Bankbazaar.
The average ticket size for home loans increased to Rs 28.43 lakh in the first quarter of 2021 from Rs 27.74 lakh in the previous quarter. This dropped in the second quarter with the outbreak of the second wave, however, from the third quarter onwards, the ticket sizes have picked up again, the report said.
There have been two notable launch performances in CY21 with Gurgaon and Noida leading the pack. "Major launch success was witnessed in DLF’s independent floor products in Gurgaon. This was followed by Godrej selling out 85% of the launched inventory in Noida Godrej Woods (Sector 43). Elsewhere, Macrotech has clocked 60% sales to launch in Lodha Woods (Kandivali E), said Rahul Jain, analyst at brokerage firm Emkay Global
In Calender year 2021, Bangalore, Noida and Mumbai witnessed notable increase with the share of listed developers rising to 34%, 34% and 9% respectively. According to the brokerage, the three key stand out markets for realtors are NCR, Mumbai and Hyderabad registering 15%- 20% increase in launches (annualized) over 2019