Real Estate Sector: The residential sector in 2022 witnessed a robust demand revival with the year registering a decadal high home sales with 2,15,000 units across the top-seven cities (Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune), according to a report by real estate consultancy JLL. It is almost like the sales of 2,16,762 housing units in 2010.
Experts said the recent hikes in home loan interest rates have not impacted housing demand much. The RBI has raised its key repo rates by about 225 basis points in back-to-back hikes since May 2022, which has made loans, including home loans, costlier.
“Comparing the yearly numbers, the sales in 2022 increased by 68 per cent year-on-year (YoY) with more than 50,000 units sold in each of the four quarters of 2022. The historic high sales numbers are significant keeping in mind the rise in mortgage rates, property prices, and global headwinds during the year,” according to the JLL’s Residential Market Update – Q4 2022.
It added that despite all these challenges, consumer sentiments remained positive, and the residential market has set new benchmarks in 2022 after two COVID-impacted years. Bengaluru, Hyderabad, Mumbai, and Pune have achieved the highest sales post-2008 thus witnessing remarkable growth. Delhi NCR and Kolkata have recorded the highest sales post-2014.
Bengaluru and Mumbai jointly led the annual sales in 2022 as they clocked more than 46,000 units (22% share each) followed by Delhi NCR at 38,000 units (18% share). Kolkata, along with the two bigger markets of Mumbai, and Bengaluru witnessed the highest yearly growth in sales.
Saransh Trehan, managing director of Trehan Group, said, “The good sign is that recent hikes in home loan interest rates have not impacted housing demand much. Interest rates are still in a comfort zone of sub-10 per cent per annum and therefore we think the momentum in the real estate sector is likely to continue in the new year.”
Quarterly sales numbers (October-December) improved by 16 per cent in Q4 2022 as compared to Q4 2021. However, sequentially it was down by 5 per cent as there was a cautious approach and delayed decision-making observed in the last month of the year by prospective home buyers due to the global headwinds and uncertainty in the economic conditions. In the second half of the year (H2 2022), sales accounted for 51 per cent share of the overall sales in 2022.
Siva Krishnan, managing director and head (residential services- India) at JLL, said, “The high sales volumes in H2 2022 show that sales were still robust despite the recent challenges underlining the strength of the residential market in India and the increasing importance of home ownership post-pandemic.”
He added that the Indian residential market is expected to sustain its growth momentum in 2023 while dealing with the challenges of global headwinds and higher interest rates. Moreover, the momentum inhibitor looks to be a temporary one as India has a resilient domestic economy and robust macroeconomic fundamentals
Pradeep Aggarwal, founder and chairman of Signature Global, said, “Home buying scenario has changed significantly post COVID-19. Most families now understand the importance of owning a house and this is why we are witnessing strong demand in the housing sector, across segments.”
He, however, added that the sector needs support from the government so that the demand remains intact even in 2023. Homebuyers and developers both are hopeful and expect home buyers’ friendly announcements in the upcoming budget.
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