If the improving housing affordability is any cue, India’s real estate sector is likely to witness better sales and supply in the coming months. Despite the continuous impact of the coronavirus pandemic on the industry.
Also, RBI continuing to keep the repo rate unchanged at 4%, will boost the realty sector. Homebuyers will be able to get home loans for as low as 6.65% on an annual basis.
Rising demand among millennials
Demand for buying homes among Indian millennials has increased compared to pre-covid levels. Mortgage rates hitting a multi-decade low has further accelerated the demand. According to NoBroker.com millennials are looking to move into suburban areas. Moving where things are more affordable and spacious. They are showing interest to buy a 3BHK, the cost which is comparable to 1 or 2 BHK in neighborhoods surrounding IT hubs.
They don’t wish to spend their finances on rented accommodation and hence are leaning towards possessing their own. Hence, home buying investment is likely to see a boom in the near term.
Work from home culture
The pandemic came into the lives of individuals out of nowhere. This spread like a sheer wildfire, altering almost everything that came it's way. People across the globe found themselves confined within the four walls of their homes. These changes paved the way for a new professional culture called work from home.
As work from home gains traction, home buyers look forward to buying a spacious house as well as suits their lifestyle at affordable pricing. People are preferring to have their work set up in the comfort zones of their homes rather than walking to work.
This demand will lead to a fresh supply and will help investments to pour into the real estate sector.
Investments in gated communities
Meeting the family’s requirements is a prerequisite and safety is one of the major concerns. Thus the near-term trend states an increase in buying of gated communities and societies. Gated societies offer both security and state-of-the-art amenities. Hence preferred by the consumers.
Users also tend to prefer ready-made homes as not everyone likes to spend their time and efforts on the building and construction process. Delay in possession is another reason why consumers are preferring ready to move-in homes for the swift process.
Investments in plots and land
Considering the social distancing norms due to Covid-19, people are willing to invest in land or plots as a long-term investment. People will then set up their homes as per their requirements. Self-owned homes offer optimal implementation of social distancing. The trend is being expected to speed up and pave the way for real estate recovery.
Government initiatives
The Government of India has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies.
The Atmanirbhar Bharat 3.0 package announced by the Finance Minister in November 2020 included an income tax relief measure. This was for real estate developers and homebuyers where primary purchase/sale of residential units valued up to Rs 2 crore.
The reduction in stamp duty has also led to a significant surge in sales of homes in Maharashtra, particularly in Mumbai. This comforts the long-beleaguered real estate sector of this region.
Schemes like Housing for all by 2022 and PMAY have further boosted the growth of the real estate sector. These initiatives by the government will be a major contributor to push the growth of the home-buying process in the coming months.
Road Ahead
The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform. This will allow all kinds of investors to invest in the Indian real estate market. According to the IBEF report, this would create an opportunity worth Rs 1.25 trillion in the Indian market in the coming year. This will further boost the growth potential of the sector.
Closing Comments
A combination of low home loan rates, reduced prices, rebates and offers by developers, and increased household saving rates, along with the millennial mindset to invest in properties have provided the right growth environment for the residential segment to grow. This will help to regain what was lost during the pandemic by both the consumers and real estate developers.
