Real Estate dynamics changing from 2021 to 2022

During the aftermath of the pandemic in 2021, residential real estate experienced a meteoric rebound. Families in India have once again realized how important it is to own their own homes. Stamp duty cuts and falling interest rates contributed to the demand for owned homes. Home has become more valuable than ever before due to the pandemic, and people are now pickier about where they live.

Property prices have been increasing at a compound annual rate of 1-2 percent since 2014, which is somewhat slower than inflation and slower than income growth. Property values have remained stable, while incomes have grown by 8% to 10% each year. In 2000, the average house price was roughly six times a buyer's salary. Approximately four times an individual's annual salary will be needed to purchase a home in 2021.

All cities have experienced an increase in affordability between 2011 and 2020. A sharp drop in financing costs - from around 8.9% in 2019 to below 7% now, the average home loan rate has decreased dramatically, more than offsetting the impact of lower incomes on affordability.

Some banks are offering home loans with interest rates as low as 6.65% as of 2021. The current interest rates on house loans could allow a person to get an additional loan of around Rs 6.5 lakh. If a person takes out the same amount of loan, the EMI is reduced. Compared with before the home loan interest rates dropped, the EMI would be roughly Rs 4,000 less.

In contrast, the issue of affordability is not only related to reduced interest rates on home loans. Real estate made real estate cheaper for buyers through interesting offers and discounts to attract the target audience; this was time to keep their clients. These difficult times have led to new projects being initiated, indicating that the demand is increasing.

By 2022, the NRI investment in the Indian residential market is expected to increase due to improved foreign exchange conversion rates, reduced uncertainty associated with pandemics, and increased transparency in light of stricter regulations. The size of apartments will not matter as much in around 2022 because a product's design will. More and more consumers are preferring an extra room; the outside of a home (open spaces and amenities) is equally important as what is inside. There has been a significant shift in homebuyers' preferences toward integrated townships, walk-to-work, shops, hotels, hospitals, schools, and parks.

Across almost all segments of the real estate market, including luxury, affordable and mid-segment housing, the demand for ready-to-move-in units has grown over the past year. Home buyers preferred completed apartments over under-construction properties, with 21% of the homes sold in 2020 being ready-to-move-in, up from 18% last year, as they opted to avoid the risks associated with under-construction homes.

More than 25% of RTMs in Delhi-NCR will be sold in 2021, compared with around 15% in 2019. Nevertheless, by the end of 2021, RTM properties will be in short supply. As a result, new launches for credible developers will be in high demand in 2022. The market share of top-listed developers is predicted to rise from 21% in FY 2021 to 25% in FY 2024, according to a recent report by ICICI Securities. Under-construction property prices are expected to be higher because of the price differential. In most major real estate markets, new launches increased by about 50% year-over-year, indicating that the sector understood this upcoming demand.

The majority of buyers in 2021 emphasized affordability. In major residential markets, more than half of the housing demand has been for apartments priced below Rs 45 lakh, followed by about 25% demand for homes priced between Rs 45 lakh to Rs 75 lakh. To ensure that the affordability of homeownership is not adversely affected by rising input prices in 2022, developers will also deploy technology in many aspects of real estate development and business to optimize costs.