Demand for Affordable & Mid-budget Homes Expected to Rise Post Lockdown

Kishan Thakkar K

Introduction

The Indian real estate sector was emerging out of an uncertain phase of economic condition. The new variant, Omicron, is fast becoming a reason for the concern for the government and also the real estate sector.

In a quarterly report from PropTiger.com, titled Real Insight: Q3 2021, home sales and new launches showed significant improvement between July and September 2021, which indicates the real estate sector is nearing a turnaround.

During the April-June period of 2021, the average values of residential properties in India’s eight prime markets have marginally increased, according to data obtained from PropTiger.com. New housing prices have increased by 5% in cities such as Hyderabad and Ahmedabad when compared to prices in the same period in 2020. 

Sales20212020QoQYoY
CityQ3Q2Q3
Ahmedabad5,4831,2823,339328%64%
Bengaluru6,5471,5914,825312%36%
Chennai4,6657092,317558%101%
Delhi NCR4,4582,8284,42758%1%
Hyderabad7,8122,4293,260222%140%
Kolkata2,6511,2532,479112%7%
Mumbai14,1633,3817,378319%92%
Pune10,1282,4957,107306%43%
Total55,90715,96835,132250%59%
Source: Real Insight (Residential) – July-September (Q3) 2021

Work from home is one of the reasons why people are looking for a home. The majority of people work from home and a majority of children study at home, both of which require more room to work and study. A large number of affordable segments were sold in recent times. However, several government initiatives, such as the reduction of stamp duty, played a significant role in assisting in the rise in the purchase of affordable housing. Due to this, there is a surge in demand for affordable houses and workspaces with ticket sizes between Rs 35-50 lakh in Tier 2 and Tier 3 cities/towns.

Homebuyers can currently get home loans for as low as 6.65% annual interest thanks to the RBI holding its repo rate unchanged at 4%, a marked decrease from the 8% average interest rate seen in January 2020. Due to the impact of demand on prices, the housing segment has also seen price growth slowdown in the past year.

CityAverage price range as on September 30, 2021 (in Rs per sq ft)*Annual growth in %
Ahmedabad3,300 – 3,5008
Bangalore5,400 – 5,600 4
Chennai5,300 – 5,5003
Hyderabad5,800 – 6,0006
Kolkata4,100 – 4,3002
MMR9,600 – 9,8003
NCR4,300 – 4,5005
Pune5,000 -5,2004
National average6,200 – 6,4005
Source: Real Insight (Residential) – July-September (Q3) 2021

Property brokerage firm JLL India has released a report titled ‘India Real Estate Outlook – A new growth cycle’, which stated that new housing supply in 2021 would be focused on the affordable and mid-segment, with developers taking advantage of strong pent-up demand in the market.

CityAverage price as on June 30, 2021 (in Rs per sq ft)Annual growth in %
Ahmedabad3,2515
Bangalore5,4954
Chennai5,3083
Hyderabad5,7905
Kolkata4,2512
MMR9,475No change
NCR4,3372
Pune5,0833
National average6,2343
Source: Real Insight: Q2 2021

Govt initiatives for affordable housing in 2021

Since last year, the government has also been working to revive the real estate industry. Earlier this year, Finance Minister Nirmala Sitharaman announced some measures intended to benefit affordable and mid-range housing projects.

By granting a boost to the affordable housing sector in the 2021 budget, the Union government hoped to assist the weaker sections of society with affordable housing segments of the Pradhan Mantri Aawas Yojana (PMAY).

The Affordable Rental Housing Complexes (ARHC) scheme, which is a sub-scheme under PMAY, has also proven to be an aid to the urban poor since it provided them with a decent standard of living.

Conclusion

The ministry of housing and urban poverty alleviation had previously proposed easing norms on foreign direct investment in real estate projects to encourage investor participation in the country’s housing sector. While the real estate sector is showing positive signs, it is prevalent that the sector will have a positive trajectory for the future. During these times, it is advisable to invest in the real estate sector. If you want to be free from the hassle of the research, contact us to help you for finding your perfect investment opportunity!

Staying informed and discussing with experienced & experts while making a decision is an ideal way of making a great deal. All you have to do is contact RoodLand, which provides the best real estate services. For any queries and suggestions, contact us at info@roodland.com and discuss all of your options with us!

RoodLand is a business solution and advisory organization for the Real Estate sector. It is founded by young professionals with experience in management, marketing, finance, and digital technologies. With their innovative marketing concepts and out-of-the-box methods, RoodLand has successfully delivered amazing results across the region. 

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Thank you for reading!

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