Real estate sector on the verge of seeing a huge rise
SOURCE: Hindustan Times
The real estate industry’s predominance in contributing to the country’s economic prosperity is well established, and the structural rise in housing predicted over the next few quarters is anticipated to further solidify this position. All of the prerequisites for a housing boom are in place: a growing working population, increased urbanisation, a shift toward nuclear families, the lowest mortgage rates in history, and a pandemic that has emphasised the importance of owning a home.
Recently, Deepak Parekh, chairman of Housing Development Finance Corporation, was reported as saying, “It is not just pent-up demand that will drive growth, but the country is seeing a structural revolution in housing need.” This is due to a combination of first-time homeowners and consumers moving up the property ladder in order to upgrade to larger homes or acquire a second home in a different location.”
Currently contributing 6-7 percent to the country’s total Gross Domestic Product (GDP), India’s real estate sector is predicted to reach a market size of $1 trillion by 2030 and contribute 13% to GDP by 2025, according to a recent analysis by the India Brand Equity Foundation (IBEF).
Between 2014 and 2020, the issue was oversupply, which resulted in sector stagnation / plateauing. The infusion of cheap money into the real estate market resulted in substandard projects and consequently excess supply. The situation improved in 2018 as a result of the NBFC crisis, as cheap money flow was constrained and the resulting liquidity squeeze resulted in developer consolidation.
This undoubtedly gave listed and reputable developers an advantage. Consumer preferences have changed toward reputable developers due to the assurance of high-quality homes and the capacity to deliver on time. When combined with recent rate reductions and low borrowing rates, home is becoming more affordable. According to Anarock, the Mumbai Metropolitan Region (MMR) experienced the largest year-on-year loss in unsold housing inventory in the last seven years, increasing the likelihood of price increases.
Annual home price rise that is consistent with wage growth is critical, and progress in that direction will be critical for the country’s economy. Real estate price rise and a healthy housing market are critical for the development of middle-class wealth, which is necessary for economic progress. We have observed a tendency in nations such as China, the United States, and the United Kingdom, where the movement from low-income to middle-income, and then to high-income, has been mostly driven by the real estate sector.
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Real estate sector on the verge of seeing a huge rise Real estate sector on the verge of seeing a huge rise Real estate sector on the verge of seeing a huge rise Real estate sector on the verge of seeing a huge rise Real estate sector on the verge of seeing a huge rise