Festive season demand: Residential real estate on the rise

Last year has seen demand surge for housing across the country. Image: Shutterstock

Demand for residential real estate has grown steadily through the year, as home sales have seen increased demand on account of low home loan rates as well as lower inventory across large cities. Data from Anarock points to a reduction in the inventory overhang from 48 months in Q22021 to 22 months in Q22022. This is the result of people preferring to buy their own homes during the pandemic. A large part of this demand was aided by lower home loan rates.

“The last year has seen demand surge for housing across the country. It has in fact accelerated quarter-on-quarter. We see the trend continuing and expanding in the festive season since a lot of customers hold their purchases till the auspicious times in the festive season,” says Praveer Shrivastava, Senior Vice President and Head of Residential Sales, Prestige Group.

Three factors make it likely that this demand will continue, and contribute to a good festive season for real estate. First, prices have been inching up on account of an increase in input costs. This contributes to higher demand, as buyers prefer to buy in a market where prices are rising. Second, a hike of 140 basis points in home loan rates to 7.9 percent hasn’t dented demand as rates are still lower than the prevailing pre-pandemic rates. This is on account of the fact that despite the global crisis leading to a hike in interest rates, the Indian economy continues to grow at 7 percent, according to Dhaval Ajmera, director at Ajmera Realty. Third, has been the need for larger homes with upgraded amenities as people work from home more often.

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With this backdrop, the festive season is expected to witness healthy demand for residential housing. The quarter before (July-Sept) is considered a weak sales period on account of monsoon and the Shradh period and sales are often bunched up in the October-December quarter.

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“Several new projects are now being launched by listed and large developers, which is also attracting several buyers and investors. Homebuyers today are skewed towards branded players who, in turn, are reporting good sales in their projects,” says Anuj Puri, chairman of Anarock Property Consultants.

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“Moreover, there is ample ready-to-move-in inventory in the market for discerning buyers and this may further push sales during the auspicious festive period [given that ready homes top demand]. As per Anarock Research, there are more than 1.21 lakh ready units presently available for sale across the top seven cities,” he says.