Introduction

There's a big demand for houses in India because there aren't enough, and the rules are good for buying homes. Also, the cities are getting better.

Last year, the number of houses sold went up by 31%, with 4.76 lakh units sold in the top seven cities. This happened even though property prices went up, and it cost more to get a home loan in early 2023.

ANAROCK, a company that helps with real estate, says Mumbai had the most sales, with over 1,53,870 units sold. Pune was second with 86,680 apartments sold.

In the National Capital Region (NCR), about 65,625 units were sold, which is 3% more than the year before. Hyderabad sold 61,715 units in 2023, which is 29% more than Bengaluru's 63,980 units sold in the same year.

Advocacy for Rules and Standards in the Housing Sector

Real estate experts say that the government helped boost the demand for homes in India after the pandemic by offering discounts and other benefits.

For example, the Maharashtra government decided in May of last year to waive half of the fee that real estate developers had to pay for the Mumbai cluster development plan for one year. This move aimed to encourage the renovation of the city's historic buildings.

To make it more attractive for people to buy homes, several state governments, like those in West Bengal and Karnataka, have given exemptions on stamp duty and lowered certain property rates in the past two years.

When it comes to rules, people feel more comfortable buying homes because of the Real Estate (Regulation and Development) Act and other measures. Developers are also doing well by meeting deadlines and creating high-quality developments.

Investors are back in the market with caution

After COVID, money started going to investors, and they got interested in buying homes when the stock market got better.

Investors became important because they helped developers start projects, hoping to make a lot of money, sometimes as much as 25%.

According to Shalin Raina from Cushman & Wakefield, a company that helps with real estate, developers' smart moves like pre-launching projects and having flexible payment plans worked well for investors.

Even though more homes were sold between 2021 and 2023, Knight Frank India, a property management firm, said that the growth rate slowed down from 50% in 2021 to 35% in 2023. This happened because of new rules and higher interest rates for home loans.

Even with higher interest rates, homebuyers are feeling more positive

As mentioned earlier, institutional interest played a big role, but regular homebuyers still have a strong impact on the demand in the industry. This is especially true because of the changes in people's buying habits due to the pandemic and the increase in homeownership.

Das explained that people's thoughts about buying homes are heavily influenced by the interest rates on home loans. Around five or six years ago, the interest rates were quite high, ranging from 11 to 12 percent. But by the end of 2021, it had gone down to around 7%, and during that time, India's real estate market was growing at a rate of 3-5 percent.

However, when inflation started going up in 2022 and continued until February 2023, the Reserve Bank of India increased its policy rate by 250 basis points, making the lending rate for the industry go up to 9 percent.

Middle-class people are coming back strong as consumers, and their preferences are changing.

When more middle-class people joined the market, things changed. People wanted to improve their lives by earning more money, and big companies started offering good products at reasonable prices.

COVID made a big difference in how people thought about buying homes. They started seeing it more as a necessity than just a way to invest money. This caused a big change in what people wanted, and a lot more homes were registered, especially in the past year.

The Impact of Infrastructure on the Industry

Improving infrastructure in places like Delhi, Bengaluru, and Mumbai has opened up new markets.

For example, places like Sewri and Chirle, near Panvel, will soon be connected by the Mumbai Trans Harbour Link, which is about to open. According to Nadar from Colliers, this creates a whole system around the beginning and end of this new infrastructure.

Last year, the Yamuna Expressway Industrial Development Authority (YEIDA) increased the budget for the upcoming Noida International Airport in Jewar, outside Delhi, from Rs 805 crore to almost four times that amount, as reported by Moneycontrol.

The government also plans to create an Urban Infrastructure Development Fund, similar to the Rural Infrastructure Development Fund, managed by the National Housing Bank. Finance Minister Nirmala Sitharam mentioned allocating Rs 10,000 crore every year to support the development of urban infrastructure in the budget presentation.

Companies Expanding Their Presence

After the COVID-19 pandemic, many real estate companies in India decided to grow their business in areas outside where they originally started. For example, Oberoi Realty from Mumbai bought land in Noida, and DLF from Gurugram started working in the Mumbai real estate market.

Godrej Properties also expanded to more cities in India, not just the big ones. And the Brigade Group, Puravankara, and Prestige Group from Bengaluru are now in the Mumbai real estate market or have said they plan to be.

Expectations for Housing Demand in 2024

Even though there has been a slowdown in the development of sectors in the past three years, experts say that prices and the number of homes being sold are still going up.

They expect that in 2024, economic measures will lead to the highest reduction in interest rates for home loans, which means more people might buy homes.

Also, with more homes available, they think the prices of homes will not go up a lot in the financial year 2025. Overall, in 2024, the people who want to live in the homes (end users) will still be the main driving force in the market, according to Rathi from Knight Frank