Affordability, security to drive home sales in 2022

In spite of challenges from many corners, in 2021 the residential real estate market finally managed to get out of the decade-old spiral as affordable rates and COVID induced restrictions brought homebuyers back into market. And after gaining momentum in the second half of the year, rising demand for own homes is expected to drive sales in 2022.

After the first COVID wave, in early-2020, the second COVID wave prolonged work-from-home and learn-from-home culture by at least another year -- forcing most professionals to improve their in-home working set-up. This, coupled with lower home loan interest rates, cut in stamp duty rates by key states and attractive deals offered by developers, helped in bringing the home occupiers back into the market. According to experts, the trend will continue to further drive home sales next year.

“Renewed buyer confidence, reduction in home loan rates, incentives & discounts by the developers have been instrumental in supporting the residential market recovery. The Jan- Sept 2021 period recorded a healthy quantum of sales and launches, which are inching towards those of the pre-COVID era,” real estate services firm JLL noted. During the first three quarters of the year (January-September), sales of residential units surged 47 per cent year-on-year to over 77,000 units, while new launches grew 38 per cent to over 93,000 units.

JLL now estimates that in 2022, sales will further grow by 20-25 per cent over 2021, driven by demand from end-users. “Average sales volume is expected to reach the average quarterly sale of 35,926 units recorded in the pre-COVID year of 2019. If prevailing economic conditions remain positive, the average quarterly sales by end of 2022 may even match the first three-quarters of the pre-demonetisation (in 2016) era (39,891 units)”, it said.

While sales numbers are yet to touch the pre-demonetisation era, what excites most developers is, unlike earlier, sales is now primarily driven by end-users. Till early-2020, before the pandemic, demand for residential were mostly driven by investors.

“The tide has surely turned of late. Now people are buying homes to actually stay in them and not just for investment purpose. The rate of return on such investments were low, compared to other avenues, which was slowing the market for the past few years. But the pandemic has made consumers realise the importance of staying in their own homes, in comparison to in rented places”, said Pradeep Agarwal, Chairman, Signature Global.

According to Manoj Gaur, Chairman & Managing Director, Gaurs Group and Vice-President, North, CREDAI National, market dynamics have changed dramatically. “The previously investor-driven real estate sector is evolving towards an end-user market. The Delhi-NCR market has shown signs of improvement that will sustain in the coming year. Some pockets that witnessed infrastructural announcements in 2021, like the area around Noida International Airport (Jewar), will be on the radar of investors and buyers. The trend of bigger and smart homes, luxury features, and increased demand for plots that started in 2021 will carry forward to 2022,” Gaur noted.

“Although 2021 had its share of challenges, it also paved the way for the real estate sector to adopt disruptive models to ensure business resilience and agility. Reviewing the overall performance of the Indian residential real estate market in 2021 shows a definite upswing. Homebuyers are now more certain of their requirements and are looking for projects that cater to their specific needs, are well located, have ample amenities and is in close proximity to essentials, medical facilities, work and entertainment”, said Ramani Sastri, CMD, Sterling Developers.

The structural changes in the sector, backed by government policies and market dynamics, since 2015 have also played a key role in the demand scenario. According to Shishir Baijal, CMD, Knight Frank India, these coupled with interest rates at an historic low, has significantly improved affordability in the last two years. “We believe a combination of best affordability levels and a pick-up in economy will serve as key catalysts for the country’s housing market next year”, he said.

As per a latest report by market research and analysis firm Housing.com, large metro markets like Mumbai, Bengaluru and Hyderabad will drive residential demand revival in 2022. It also noted that increased traction in Tier-II cities such as Surat, Jaipur, Patna, Mohali, Lucknow and Coimbatore are promising signs as remote working  is set to continue in 2022. 

“Homebuyers are now leaning towards larger homes and localities with access to better healthcare services, security, and open spaces”, it noted. The search queries for apartments with 3+BHK configuration grew by 15 per cent year-on-year in 2021, while for residential plots it went up by 42 per cent.

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