Low home loan rates and steadily increasing homeownership sentiment helped maintain gains and momentum in residential real estate
We are on the last leg of 2022. The real estate sector was witness to a multitude of developments, such as decline in affordable housing, launches in mid-range and premium housing, surge in rental demand, and a construction ban to control pollution after Diwali.
Here are some of the major trends in India’s housing market in 2022.
House Sales In 2022
Going by the housing sales recorded till now and in the first three quarters this year, 2022 would breach the previous peak of 2014 in terms of all-time high sales across the top-7 cities of India. The latest Anarock data projects total sales in the top-7 cities to exceed 360,000 units in 2022 (in 2014, the previous peak year, the number of sales were recorded at 343,000 units.)
Additionally, there was robust housing demand, mainly from end-users, across the top cities and tier-II and tier-III cities. In the year’s first half, job security had improved vis-a-vis the uncertain pandemic period, according to an Anarock report.
“The residential sector has witnessed good sales, and launches have also shown signs of an uptick during 2022. Private equity investment has also increased significantly in 2022,” says Pradeep Aggarwal, founder and chairman, Signature Global.
However, the unpleasant part during the year was a significant increase in mortgage rates. Compared to the start of the year, interest rates on home loans are now up by more than 2 per cent. This is likely to have an adverse impact on housing demand in 2023.
Affordable Housing Declines, Mid-Range And Premium Housing Dominate Launches
The mid-range (Rs 40-80 lakh), premium (Rs 80 lakh – 1.5 crore), and luxury segments (greater than Rs. 1.5 crore) were the showstoppers of 2022, according to data shared by Anarock.
In contrast, affordable housing had a lean time, with more buyers in this segment going into wait-and-watch mode; unsurprisingly, new supply in this category has shown a significant reduction.
According to an Anarock data, in the pre-Covid year of 2019, affordable housing had the highest supply share at 40 per cent, with 236,560 units launched in the top-7 cities. In the first nine months of 2022, affordable housing supply was limited to just 21 per cent of the approx. 265,000 lakh units launched in the top-7 cities during this period.
Land - The Plot Thickens
Plotted developments were popular in 2022, especially in south India. Though the worst of the pandemic, which saw increased demand for independent living, is over, plots are still ruling the roost in terms of residential housing in Bengaluru, Chennai, and Hyderabad.
“Bigger homes, independent floors and plots were the main sought-after or preferred option of home buyers during 2022,” says Saransh Trehan, managing director, Trehan Group.
Construction Ban
Many homebuyers were left wondering about the fate of their under-construction buildings, as the government banned construction activities in the National Capital Region (NCR) last week after the air quality index (AQI) dipped into the “severe” category, potentially disrupting the real-estate market.
On October 28, 2022, the government banned all construction activities in Delhi NCR under the stage III Graded Response Action Plan (GRAP) following rising pollution levels in the region.
Rental Demand Surge
With more companies calling their employees back to office, at the very least in the hybrid model, rental demand rose again after softening considerably during the worst of the pandemic.
Rental market demand not only breached pre-pandemic levels, but also surpassed them, and many housing societies reported having few to no vacancies.
Rentals rose 20-25 per cent against pre-pandemic levels on average, with some of the more popular societies seeing more than a 30 per cent increase.