Dr. Atul Goel Pune, MD of the Goel Ganga Group and President-Elect of NAREDCO Pune, discusses his outlook for the coming year...
A pandemic is difficult for anyone. But it is only when things become truly difficult that we learn what we are truly made of. If I had to sum up what the COVID crisis revealed about the nature of the real estate industry, I would say it revealed a steel spine and a concrete soul! Real estate has shown remarkable resilience as an industry, and we anticipate a strong real estate performance in the coming year. Let us examine the trends, factors, and key ingredients that will drive the real estate market forward in the coming year.
The king is the homebuyer.
The coronavirus pandemic struck society as a surprise. While this resulted in an unavoidable and unprecedented slowdown in site visits, it also resulted in the human population as a whole suddenly realising the importance of home. People realised that their home is their first and best defence against the vagaries of the outside world when the entire world went into lockdown mode. People began working from home, and children began studying from home... Everyone realised they had new expectations and requirements from their home. They required more space, better planning, and homes that provided complete lifestyle solutions.
The real estate industry responded spectacularly. And new projects were designed and launched with the changing needs of buyers in mind, with the home buyer at the centre of all planning and design. This, along with appealing schemes such as deferred payments, reduced down payments, EMI holidays, free house furnishings, stamp duty payment by the developer, and group discounts, is expected to continue in the new fiscal year. After all, the pandemic is not over, and the home buyer should take advantage of the incredible opportunities to secure a home that is tailored to his specific needs and made affordable due to all of the incentives.
Low mortgage interest rates
The Coronavirus crisis occurred during a period of historically low home loan interest rates. The Reserve Bank of India maintained its accommodative stance, keeping REPO rates as low as 4.25 percent. It had a direct impact on housing loan disbursements, and interest rates on home loans remained low.
Most public and private sector banks' home loan rates remain in the range of 6.50-9.50, making it quite affordable for the middle class, which accounts for the majority of new home buyers in India.
With restrictions relaxed and site visits resumed, the home buying trend is expected to pick up, and housing finance rates will remain affordable in the coming fiscal year. However, a word of caution to home buyers: people are buying quickly, so your wait and watch policy may backfire; your dream home will not wait for you for long; there are far too many people who want it as well.
Excellent Return on Investment (ROI)
One thing is undeniably clear. Housing demand is increasing and growing rapidly. According to the most recent CBRE report, India Market Monitor, continued attractive mortgage terms and government incentives are propelling housing sales tremendously. Housing sales increased 46 percent quarter on quarter to 50,000 units in the third quarter of 2021 (Q3 2021), and 86 percent year on year. As a result, despite the challenges and upheaval caused by the pandemic, the residential sector has demonstrated great resilience and will continue to soar in the coming fiscal year.
As residential prices rise in the near future, this trend of robust and recovering demand will ensure a noticeable return on investment. For example, if a person invests Rs 1 crore in the real estate sector of any of India's top eight cities, an overall ROI of 25-30 percent can be comfortably expected.
Price increases are unavoidable.
The coronavirus's impact on the Indian economy was like a domino effect. In the construction industry, input costs have risen due to rising prices for fuel, steel, bricks, and cement, among other things. Input costs have risen by more than 20% in the last few years.
This fact is supported by the RBI's recent Housing Price Index, which revealed that the all-India HPI increased by 2.6 percent year on year in Q2 2021, up from 2 percent in the previous quarter.
Furthermore, rising demand has resulted in the clearing and sale of ready stocks by major developers. This will also give the real estate industry an opportunity to raise prices. Experts believe that a 10-15% price increase is unavoidable in India's housing markets.
Housing for Everyone
The Pradhan Mantri Awas Yojana (PMAY), the Indian government's flagship mission, will be completed in 2022. As a result, the remainder of this fiscal year will be devoted to the implementation of affordable housing schemes and the provision of low-cost housing. Affordable housing developers will benefit from lower interest rates and other incentives. Furthermore, because the government is encouraging new housing technologies, which have significantly reduced the cost of housing units, the lower middle class to economically weaker section (EWS) of society will have more housing options.
The ideal time to invest
According to real estate analysts, now is the best time in a decade to invest in real estate. With prices at their lowest and a supportive finance mechanism, there should be no more wiggle room in the decision to buy. We must also warn that this rosy period may not last long, as once the market has fully recovered, prices will skyrocket, and homebuyers may have to pay up to 30% more than current prices. If you've been waiting a long time, now is the time to invest.
To summarise, the real estate market is booming, and market conditions are making it even more appealing. Waiting and watching was justified during the pandemic, but it is no longer prudent. Take advantage of low interest rates, lucrative schemes, and fantastic new designs to purchase your property. Make 2022 the year when you turn incredible opportunities into fantastic decisions!
