Housing sector

The housing sector will build on this year’s growth in 2022

Falling mortgage rates, awareness of the need for housing due to the pandemic and stable house prices should contribute to a sustained recovery in the residential real estate market next year.

The housing market across the country has seen green shoots of recovery and is expected to gain momentum here. With strong end-user demand and accommodative market conditions, average sales volume is expected to reach the average quarterly sales recorded in the pre-Covid year of 2019.

The main property markets of Mumbai, Pune, Bangalore, Hyderabad and Ahmedabad have already reached these levels. “The year 2021 was one of the breakthrough years for the real estate sector, which rebounded after showing resilience, innovation and performance,” said Harshvardhan Patodia, Chairman of Credai. “We expect demand and sales momentum to continue into 2022 and more people to realize the importance of owning a home. Low interest rates and hybrid work will help drive demand.”

Renewed buyer confidence, lower mortgage rates and incentives offered by developers have helped support the housing market recovery over the past 15 months.

How scenarios unfold through Omicron would be a key factor in dictating sales momentum due to potential blockages. However, experts believe that digital marketing and online listings will help overcome this challenge.

“The lessons learned from previous lockdowns will help us better prepare for all the impending challenges that will arise. If we can meet the challenges of the pandemic, residential real estate will see strong momentum in both demand and supply. It is important to note that during the pandemic people have felt the need for better and bigger houses and this demand will continue,” said Shishir Baijal, CMD, Knight Frank India.

According to experts, the favorable interest rate regime will continue for some time, which will help buyers to convert their request into a real purchase.

“Mortgage rates offered by most major lenders are between 6.5 and 7.0% for 20-year home loans and are the lowest on record since 2005. Even assuming that mortgage rates could rise slightly in fiscal year H2FY22-23E, we believe that mortgage rates of 7.5-8.0% – assuming a 100 basis point increase – are still affordable and would not materially affect investment decisions. ‘buying,'” said Adhidev Chattopadhyay, an analyst at ICICI Securities.

Increased demand momentum, limited inventory in some segments and rising input costs are expected to drive prices up 5-7% in some micro residential markets. According to a recent study by JLL, prices are otherwise expected to remain largely stable, with the primary goal for developers being to support the current momentum in business activity and drive it forward.

The analysis suggests that 2022 will see annual sales growth of 20-25% over the previous year due to affordable synergy and other positive market conditions. With strong end-user demand and favorable market conditions, average sales volume is expected to reach the average quarterly sales of 35,926 units recorded in the pre-Covid year of 2019.

The January-September 2021 period saw a good quantum of sales and launches, which is approaching those of the pre-Covid era. Sales of more than 77,000 residential units were recorded in the first three quarters of 2021, an increase of 47% compared to the same period last year. New launches of approximately 93,000 units were recorded, indicating an increase of 38% compared to the same period last year.