Industry Report Indicates Stronger Housing Sector Post-Covid

While the COVID-19 pandemic has impacted businesses across the world and the Indian residential real estate sector has also felt the heat, a few trends indicate that the sector is likely to emerge stronger in the years to come, according to a FICCI-ANAROCK report. Weighted average prices across the top 7 cities have grown nominally at a compounded rate of 3% between 2012 and 2019. This has been less than the prevailing inflation rates and the growth in income which provides an opportunity for the home buyers to do bottom fishing. Interest rates are at their decadal lows owing to a steep reduction in repo rates. Also, the ratio of the home loan payment to income has been reducing over the years. According to industry estimates, affordability for a mid-income apartment in Indian city will be at 27% in FY21, which is among the lowest in the last two decades. While overall sales are on a decline, listed developers continue to do well, indicating that homebuyer preference is inclined towards better-organized players that now dominate the segment.According to the report latest consumer sentiment survey, 62% of the prospective buyers prefer to buy a home from branded developers, even if it is relatively higher priced. The developers are cognizant of the changing market conditions and have effectively controlled launches to not create an oversupply situation. This adaptability and agility to respond as per the market conditions will go a long way for the sector’s growth and stronger emergence in the years to come. Amidst the slew of structural changes, policy reforms, and controlled launches, the absorption to supply ratio has improved from 0.69 in 2013 to 1.36 as of H1 2020. This is a good indicator of the sector’s emergence and growth in future periods. Last but certainly not the least, the government has been instrumental and supportive to ensure that the residential segment emerges stronger post-pandemic.