Indian Home Prices Forecast to Rise
Based on a recently published report, India's residential property values are poised for a 4-6% increase this year, fueled by growing per capita income levels boosting housing demand.
Favorable Economic Conditions Expected
CRISIL Ratings suggests a confluence of factors like controlled inflation, stable commodity costs, reduced fiscal deficits, and a decline in global policy interest rates is anticipated will lead to interest rate reductions. These lower rates are expected to stimulate greater activity in the housing market.
According to the report, "A stabilization in capital values, coupled with anticipated moderation in interest rates during the latter half of this fiscal year, should improve affordability following a decline in the preceding two years due to a sharp rise in both interest rates and capital values."
Market Share Expected to Double
The market share of India's top 11 listed real estate developers is predicted to double to 30-32% this year. This represents a significant jump from the 15% recorded before the pandemic in fiscal year 2018-19.
These leading developers include entities such as DLF Limited, Brigade Enterprise, Godrej Properties, Kolte-Patil Developers, Microtech Developers, Mahindra Lifespace Developers, Prestige Estates Projects, Puravankara, Sobha, Shriram Properties, and Sunteck Realty, all known for their consistent project delivery and quality construction.
Sales Volume Increase Anticipated
CRISIL Ratings maintains that factors like increased demand for premium properties, greater affordability relative to income, coupled with per capita income growth should enable large, listed residential developers to achieve a 10-12% increase in sales volume this year. This follows an estimated 14% growth recorded in the previous year.
According to Pallavi Singh, associate director at CRISIL Ratings, "Major Developers have already improved financial health by reducing debt through strong sales and collections over the past two years and concentrating on the usage of asset-light strategies, such as joint ventures and joint development."
Shift in Housing Supply
The available housing supply has seen a shift towards mid-to-high-end and luxury properties, with fewer new launches in the affordable housing segment. The report indicates that the proportion of new projects in the mid-to-premium and luxury segments is expected to reach 55-60% in 2023-24, marking a significant rise from the 30-35% observed before the pandemic.