Housing sales continued their winning run in 2022, with listed and large developers increasing their market share as buyers steered clear of construction risks and zeroed in on quality and brand value. Bigger homes remained the flavour of the year, with buyers willing to shell out more to secure future-ready homes which can withstand all future blows.
According to ANAROCK, prices rose by between 3% and 5% in most urban areas. Tier 2 and Tier 3 cities like Ahmedabad and Lucknow saw increased buying sentiment and ramped up their potential as the future growth engines of the Indian real estate market. Hopefully the current sales momentum will sustain at least into the first quarter of 2023.
“2023 will see continued action on the housing market, especially with the spectre of Covid-19 – which had unleashed renewed homebuying sentiment in 2021 and 2022 – once again rearing its ugly head. That said, further repo rate hikes could impact sales, especially in the affordable housing segment which is particularly price sensitive. A recession in the US could impact both disposable incomes and the employment situation in India to some extent. However, the housing sector has proved its resilience as the preferred investment asset class, now also among previously rent-favouring millennials, even in the face of major headwinds,” says Anuj Puri, Chairman, ANAROCK Group.
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The real estate sector, thus, bounced back strongly in 2022, with the resumption of economic activities in full swing, post the COVID-19 pandemic. All segments of real estate – housing, office, retail, warehousing, data centers, co-working, and co-living – performed well. Housing sales too are all set to breach the pre-COVID levels and may achieve an all-time high. The pent-up demand of the last two years and the strong need to own residential properties in the wake of the pandemic were the two major demand drivers behind this strong revival.
Dhruv Agarwala, Group CEO, Housing.com, Proptiger.com and Makaan.com, says, “Interestingly, the sales momentum has remained intact despite an increase in interest rates on home loans by over two percentage points. Leasing of office, retail and warehousing spaces also recovered this year. Co-working and co-living operators heaved a sigh of relief as business was back, with the opening of offices and educational institutions. The capital as well as the rental value of properties also appreciated. PropTech companies continued to grow with the increased usage of technology across various stages of the real estate value chain.”
“In a nutshell, it was a good year for the entire real estate sector after a long gap, looking past the disruptions in the last 5-6 years caused by demonetisation, the introduction of RERA & GST, the NBFC crisis and of course, the COVID-19 pandemic. We strongly believe that the real estate sector will continue on a growth trajectory in 2023 as well,” Agarwala adds.
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Ankur Gupta, JMD, Ashiana Housing Ltd, has similar views. “There have been signs of growth in the housing market across the country, and this trend is anticipated to continue. The sales volume has increased owing to strong end-user demand and accommodating market circumstances. In 2022, sales and the idea of home ownership have increased nationally given that the government has intervened and made efforts to encourage and accelerate the sector’s growth. Also, the consumers today are more convinced about their investments, and we are confident that the housing sector offers great potential,” he says.
Reforms during the past few years, particularly the implementation of the Goods and Services Tax (GST) and the Real Estate Regulatory Authority (RERA), have brought transparency to the housing sector.
In the coming years, it’s anticipated that the economy will expand, pre-pandemic working conditions will return, and a number of other factors will probably influence the housing market. While developers provided incentives and discounts to homebuyers, state governments stepped in by new policies supporting the same. As a result, there is every reason to believe that the real estate market will continue to perform strongly and profitably in the upcoming year.
“The forthcoming Budget will likely include several economic measures that the real estate industry has begun to anticipate. The sector, which creates the second-largest number of jobs after agriculture and accounts for around 6% of India’s GDP, seeks government backing to maintain the rebound (GDP). The real estate sector’s top budget priorities should include expanding tax benefits for homebuyers and changing the definition of affordable housing,” adds Gupta.