The current ASP of newly launched residential projects in most of India’s tier 1 cities has continued to plateau in the last few quarters, with prices appreciating minimally, ranging between 1 percent to 3 percent annually as per the latest PropTiger report. As per the distinguished digital real estate brokerage firm, approximately 50% of the total housing demand in the primary residential markets in major cities is for 2 BHK housing units costing up to INR 45 lakh.
As per the latest Real Insight report for the January-March 2021 quarter released by PropTiger, residential real estate sales declined only by 5 percent year on year, thus indicating that the demand is slowly coming back to pre-COVID levels. In comparison with the first quarter of last year, Bengaluru, Mumbai, and Pune witnessed a fall in sales, whereas Ahmedabad, Kolkata, Hyderabad Delhi-NCR, and Chennai, saw growth, albeit a small growth, in demand.
On analyzing the sales figures in these cities, some interesting statistics came to light. Around 45 percent of sales in the first quarter of this year were attributed to the affordable housing apartments priced below Rs 45 lakh. Estimated, 26 percent of the sales were in the INR 45 to 75 lakh price bracket, 10 percent in INR 75 lakh to 1 crore, and 19 percent in above INR 1 crore plus ticket size. As much as 44 percent of the total demand was for units with 2 BHK configuration.
Mani Rangarajan, Group COO, Housing.com, Makaan.com, and PropTiger.com, has been quoted saying that “Affordable housing segment has been a top performer since the last few years. The government is providing tax incentives and interest subsidy to boost demand in this segment and achieve its target of Housing for All.”
Speaking about the broader market scenario since the outbreak of coronavirus pandemic in 2020, he said that, “After a huge setback during the April-June quarter of 2020, India’s residential property market has been recovering month-on-month on pent up demand, festival sales, and the rising importance of having home ownership.”
Sales of residential apartments in 2021 have almost reached the pre-COVID levels driven mainly because of low interest rates on home loans. However, Rangarajan is of the belief that the second wave of COVID-19 and semi-lockdown in many states will definitely dampen the recent revival of housing demand.
“Though it is too early to assess the impact, we need to keep in mind that the real estate industry is more prepared this time to handle the situation. The sector has taken a giant leap in the adoption of digital tools for marketing and sales during the last year,” he said.
On examining the supply end of residential real estate, research has shown that new supply rose by 49 percent year-on-year to 53,037 units across Delhi NCR, Chennai, Pune, Mumbai, Ahmedabad, Hyderabad, Kolkata, and Bengaluru. In sync with the demand, the new supply consists mainly of units the under INR 45 lakh category, with a 45 percent share of the whole. The mid-segment price bracket accounts for 27 percent of the total supply in the first quarter whereas the INR 75 lakh price bracket accounted for 28 percent of the total supply.