The past year has seen an inflated demand for move-in ready units in almost all real estate sectors, including luxury, affordable and mid-range homes.

Circa 2021 – the time when residential real estate experienced a meteoric bounce back from the effects of the pandemic. The need to own your own home has taken back its paramount importance to every Indian family. Lower interest rates and lower stamp duty have been the much-needed catalyst for the growing demand for home owned. The pandemic has made people value home more than ever and they are now more specific about their choices.

Real estate prices have risen at a compound annual rate of 1-2 percent since 2014, which is somewhat slower than inflation and lags behind income growth. On the other hand, while property values ​​remained stable, average annual income growth was between 8% and 10%. Real estate prices were, on average, about six times a buyer’s annual income in 2000. In 2021, the average home price an individual earned was four times their annual salary.

Between 2011 and 2020, affordability increased in all cities. Sharp drop in cost of finance – Average home loan rates have fallen from about 8.9% in 2019 to less than 7% now, offsetting the negative impact of lower incomes on affordability.

As of 2021, interest rates on mortgages in some banks have fallen to 6.65%. At the current home loan interest rates, a person can get an additional loan of around Rs 6.5 lakh. EMI is reduced if a person decides to take the same loan amount. The EMI will be about Rs 4,000 lower than it was before the fall in the interest rates on housing loans.

On the other hand, reduced interest rates on housing loans are only one aspect of the issue of affordability. To attract the target audience, real estate has come up with interesting offers and discounts to make real estate cheaper for buyers; This was the time to retain clients. Several new projects have been launched, which indicates that the demand is increasing in these challenging times.

In the post-COVID scenario by 2022, NRI investment in the Indian residential market is also expected to increase due to reduced uncertainty associated with the pandemic, superior foreign exchange rates, and increased transparency due to stricter regulatory measures. Around 2022, product design will take precedence over apartment size. Extra room has become an obligatory preference for the consumer; Outside the four walls (the open spaces and amenities) of the house will become just as important as what is inside the four walls. Homebuyers’ preferences are strongly geared towards integrated areas, walk to work, shop, hotel, hospital, schools, and parks.

The past year has seen an inflated demand for move-in ready units in almost all real estate sectors, including luxury, affordable and mid-range homes. The share of ready-to-move-in homes (RTMI) of total home sales in the primary market rose to 21% in the pandemic that hit 2020, up from 18% a year earlier, as homebuyers preferred completed apartments to avoid risk. Associated with real estate under construction.

In 2021, RTM sales in Delhi-NCR rose to over 25% compared to around 15% in 2019. However, by the end of 2021, the supply of RTM properties will be limited; Hence, in 2022, we will witness an increase in the demand for newly launched properties of trusted and established developers. According to a recent report by ICICI Securities, the market share of major listed developers is expected to grow from 21% in FY21 to 25% in FY2024. The price differential is supposed to drive up demand for properties under construction. The sector recognized this prospect of demand which led to an increase in new launches, which grew by nearly 50% year-over-year in key real estate markets.

In 2021, we learned that affordability was an important factor for the majority of buyers. More than half of the housing demand in the main residential markets was for apartments costing Rs 45,000 followed by around 25% of the demand for homes costing Rs 45 to 75,000. Therefore, 2022 will also be a year for developers to improve cost, despite increasing input prices, by deploying technology in most aspects of real estate development and business to ensure that the affordability of owning a home is not negatively hampered.

(By Ashwinder R. Singh, CEO – Residential, Bhartia Urban, and Bestselling Author)

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