The Indian real estate saw a significant bounce back from the aftermath of the Covid-19 pandemic. The incentives announced by the government and lower interest rates fuelled the dream of owning a home among Indian families
At present, the home loan interest rates are at its lowest and in some banks case, they are as low as 6.65%. In the current scenario, home loan interest rates, a person could get an additional loan of around Rs 6.5 lakh. The EMI will be reduced now if the person decides to take out the same loan amount. The EMI would be roughly Rs 4,000 less than it would have been before the home loan interest rates came down.
The property prices have risen at a compound annual rate of 1-2 per cent since 2014, somewhat slower than inflation and lagging behind income growth. On the one hand, while property prices have remained stable, average yearly income growth has been between around 8% and 10%. Property prices were, on average, roughly six times a buyer’s annual income in 2000. In 2021, the average price of a home acquired by an individual was four times their annual salary. This growth in salary enabled an individual to buy his/her own home.
The growth in construction segment to 7.5 per cent in Q2 FY22 as compared to contraction of 7.2 per cent in same period last year, is a good sign of recovery for the real estate sector. If the GDP grows at the current rate then I expect that the construction segment will recover the losses that occurred in the first two quarters of FY21.
A recent report suggested that Indian real estate sector is expected to reach USD1 trillion by 2030. The sector is expected to contribute 13 per cent to the GDP.
In the year 2022, we expect that the interest rates are likely to remain at the current level. But the rising costs of steel and cement will affect the new buyers, as the developer will have to pass on the increase to the buyer by increasing the price of a flat. So it is necessary for the government to intervene and address the rising raw material prices.
In 2022, the NRI investments in the Indian residential market are also expected to increase due to reduced uncertainty associated with pandemic, superior foreign exchange conversion rates, and increased transparency due to stricter regulatory measures. In Circa 2022, product design will take precedence over apartment size. An extra room has become a mandatory consumer preference; outside the four walls (open spaces and amenities) of a home will become equally important to what is inside the four walls. Homebuyers’ preferences are strongly moving towards integrated township, walk-to-work, shop, hotel, hospital, school, and parks.
The last one year has seen the demand for ready-to-move-in units swell in almost all real estate segments, including luxury, affordable and mid-housing segment. The share of ready-to-move-in (RTMI) homes in total housing sales in the primary market increased to 21% in the pandemic-hit 2020, up from 18% the previous year, as home buyers preferred completed apartments to avoid the risks associated with under-construction properties.
In 2021, we have learned that affordability has been an important factor for the majority of buyers. Over half of the housing demand in major residential markets has been for apartments costing Rs 45 lakh followed by around 25% demand for homes costing between Rs 45 lakh and Rs 75 lakh. So, 2022 will also be the year for developers to optimize cost, despite increasing input prices, by deploying technology in most aspects of real estate development and business to ensure of affordability of owning a home is not hampered adversely
https://www.constructionweekonline.in/people/outlook-2022-for-real-estate
