Mid-income housing to remain as a sweet spot of the Indian Real Estate sector in 2021
Mar 17, 2021
Real estate developers’ focus on mid-income and affordable housing segments is expected to continue this year too after the sector is witnessing more than 80% of the new launches in the sub-Rs 1 crore category in 2020.
A further improvement in sales across all housing segments is expected in 2021. However, new launches are expected to remain concentrated in this price range with developers trying to reap the benefits of strong pent-up demand in the sub-Rs 1 crore category.
Developers in the past few years have already been focusing on aligning supply with demand. The government is also committed towards boosting mid-income and affordable housing and the recent Union Budget has extended the benefit of additional interest deduction on Home Loans for first-time home buyers in the mid-income and affordable segment. Further, there is a time extension to claim the tax holiday on profits from affordable housing projects until March 2022.
According to the report, in the second quarter of FY 2020-21, when the GDP showed higher than expected recovery, the housing market showed some initial signs of recovery, with sales increasing by 34% on a sequential basis. In Q4 2020, uncertainties around the economy and jobs started reducing, which led to an increase in the pace of recovery in residential real estate. New launches and sales across the seven key markets under review witnessed a significant jump.
Record-low interest rates and time correction in property prices is making it a buyers’ market. This has resulted in improved home purchase affordability, as shown by JLL’s Home Purchase Affordability Index. A combination of increased home purchase affordability and improved consumer sentiments will further lead to the translation of pent-up demand into sales.
The increase in home purchase affordability has been one of the most important factors driving sales and paving the way for buyers to return to the market. Furthermore, the market is also witnessing renewed interest from Non-Resident Indians (NRIs) impacted by economic uncertainties in Europe and the Middle East.
A healthy lifestyle has become a key criterion for homebuyers. Resultantly, preferences have tilted towards larger homes in self-contained complexes with facilities like gym, green open spaces, and access to daily necessities. Moreover, with work from home becoming a reality, product metrics are likely to change. Apartments with balconies and open spaces are expected to be preferred with increased importance of study rooms, good network, and broadband speed as well as acoustics.