Top housing experts like Deepak Parekh, Chairman, HDFC are of the opinion that despite challenges posed by recurring waves of Covid-19 infections, supply chain disruptions and resultant inflationary pressures, rising interest rates and increasing property prices, demand for residential real estate is unlikely to face a dent.
It is heartening that despite several roadblocks, the economy continues to support housing/real estate. It is still expected to be amongst the fastest growing major economies with an estimated GDP growth above 7 percent for the current year.
RBI Deputy Governor, Michael D Patra says that India is likely to be the second most important driver of global growth in 2022 after China despite the challenges posed by the pandemic and the war in Europe. According to him, the country will contribute 14 percent of global growth in 2022.
Amidst a healthy economic outlook, the growing disposable income also augurs well for real estate growth. According to a report by global advisory firm WTW, over 41 percent of companies have projected a positive business revenue outlook and 58 percent of Indian employers have budgeted for higher salary increases this year compared to last year. The companies are budgeting for an overall median rise of 10 percent, translating into an average salary increase of 9.8 percent in 2023. At 10 percent salary increases, India will continue to be the highest in the APAC region next year. China is projected to see an increase of 6 percent followed by Hongkong and Singapore at 4 percent.
The positive trend of home loan offtake also holds hope for housing growth. In the month of March this year, the largest private mortgage player, HDFC had recorded its highest number of individual loan receipts at over 86000. In the last fiscal, HDFC’s approvals and disbursals grew by 38 percent and 37 percent respectively. Not only this, the average size of loan has also been growing -reaching the figure of Rs 33 lakh last year, compared to Rs 29.5 lakh in the year before. This has been leading to strong demand for affordable and mid-priced housing.
Inorder to keep up the momentum, players are giving a big financial push to affordable housing. Recently, HDFC has raised about Rs 8700 crore from a number of investors under Syndicated Social Loan Facility to cater to affordable housing. The recent move by the central government to extend Pradhan Mantri Awas Yojana (PMAY-Urban that provides interest subsidy to home loan takers) beyond March 31, 2022 till December 31, 2024, will serve as a big booster for affordable housing.
The measured increase in home prices to ensure that housing demand does not get adversely impacted, also bodes well for the residential real estate. According to a recent Housing Price Tracker Report by Credai-Colliers-Liases Foras, except for Delhi-NCR which saw 10 percent YoY increase in housing prices in the second quarter of 2022, it has been a maximum of 5 percent. Harsh Vardhan Patodia, Credai National President has told Torbit Realty that developers are consciously taking calibrated price increases to ensure that buyers are not priced out of the market .
An equally positive development is the growing trust of property buyers in the under-construction homes. Home buyers who were earlier preferring to invest in ready-to-move homes , are now gradually developing confidence in the under-construction residential properties as there are an increasing number of new launches tailored to suit their needs and aspirations . Especially the new launches by the big and reputed developers. In the coming weeks developers expect volumes to improve with new supply that will come with offers. And as the housing prices are expected to remain range bound in the coming months amidst supportive economy and positive jobs/salary scenario, there will be a favourable ground for the festive real estate ahead.