Festive Season to Bring Cheers to Realty

Amidst rising demand, robust sales, and property appreciation, this festive season is set to bring cheers to the residential sector.   Vinod Behl

Today, property, mostly residential property, has over  50% share of the 11.10 trillion dollar household assets in India. With the economy improving, residential realty continues to do  remarkably well. This is clearly evident from the Hi2023 statistics  which show sales of 2.29 lakh housing units . While luxury housing is witnessing a big surge ,  mid-priced and affordable housing continues to do well.

In view of the  rising demand and high consumer sentiment, real estate developers are expecting about a 20% increase in home sales in the upcoming festive season. Their optimism stems from the fact that in the April-June quarter , there was about 20% qoq increase in demand.

The upbeat mood is visible from the rising new launches as developers want to cash in on the increasing demand . According to Cushman & Wakefield, there will be record new launches this festive season , especially as launches during H1 2023 were already more than double the previous year. Delhi-NCR, which recorded 139% growth in new launches in H1 2023,  will be in the forefront to drive new launches in the festive season. Developers want to cash in on the rising prices of new launches.

There are several reasons why aspiring home buyers would like to take a plunge in the festive season. Considering that there has been 4.9% qoq increase in rental rates at the pan-India level, renters would like to own a home. Prospective buyers also have the fear of missing the bus, thinking that home prices may go up.

Today, after six years of the implementation of RERA, home buyers’ confidence in under-construction projects has gone up due to significant improvement pertaining to project completions. As per Anarock report, 86% of the  housing projects launched post-RERA between H2 2017 and  full year of 2018, got completed in top 7 cities.More than  Rs 15000 crore have been deployed under central government’s Rs 25000 crore stress fund to complete stalled housing projects across India.

According to the Indian Banking Association Report, there are 4.12 lakh stressed/stalled housing units worth Rs 2.40 lakh crore across India. The central government’s seriousness to implement the recommendations of the MoHUA (Ministry of Housing & Urban Affairs) appointed committee  under ex-CEO of Niti Ayog , Amitabh Kant, will pave the way for the completion of the large number of stalled projects. The expert  committee had recommended a rehabilitation plan  under which real estate developers are required to follow a 3-year timeline to complete projects and allow co-developers for this. Developers and financiers will have to take haircuts to ensure success of the project completions. Moreover, the Uttar Pradesh government’s decision to bring co-development policy to revive stalled housing projects  in Noida and Greater Noida will help put an end to the woes of aggrieved homebuyers . Especially as 44% of total stalled units are in Delhi-NCR. There are 2.40 lakh stalled units in Delhi-NCR, with maximum units in Noida/Greater Noida. All this will further boost the confidence of prospective homebuyers in the newly launched/ under-construction projects.

Meanwhile MoHUA is finalising a new home loan interest subvention scheme to facilitate affordable housing home buyers. This will compensate for the discontinuance of the CLSS ( providing interest subsidy on home loan) beyond March 2022. This move will push the sale of affordable homes whose sales  share has been going down. This would do well to light up the festive season.

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