The housing demand in India is projected to skyrocket to 93 million houses by 2036, according to a report jointly released by private Real Estate developers body CREDAI and Liases Foras on January 9, 2023. The surge in demand is attributed to an increase in population in both urban and rural areas, healthy macro-economic indicators and favourable demographics, with several Tier II, and III cities projected to spearhead both demand and supply. Boman Irani, President, of CREDAI, said, “The rapidly growing Indian population and economy has resulted in accelerated demand and supply of homes, while also improving home buyers' purchasing power and inclining them to buy bigger houses.”
Government programs to establish Smart Cities, along with increasing commercialization activities in emerging areas, are expected to further catalyse real estate growth in Tier II, and III regions.
The past year witnessed a high volume of registrations and interest from homebuyers, marked by over 19,050 RERA registrations nationwide, with 45 per cent of projects concentrated in the residential segment.
However, the report notes a 3 per cent quarter-on-quarter decline in unsold housing inventory at the national level, but a 2 per cent year-on-year increase. Unsold inventory currently stands at 10,42,195 units. "Cities such as MMR and Ahmedabad witnessed a steep decline in the September 2023 ending quarter. Tier II cities, on the back of robust demand, also saw a drop in inventory and currently have a value of 20 months in inventory in QE September 2023," the report said.
From a pricing perspective, the report showed a consistent 6 per cent Compound Annual Growth Rate (CAGR) in apartment prices, reaching Rs 11,660 per square foot, with NCR witnessing the highest 22 per cent growth.
Among the emerging cities, Bhopal witnessed the most substantial increase in Carpet Price by 22.83 per cent from Sep-22 to Sep-23. Meanwhile, the sales growth in Nagpur and Vishakhapatnam stood out remarkably, soaring by 25.99 per cent and 24.77 per cent respectively during the same period.
Commenting on the report’s finding Prashant Rao, Managing Director, Poulomi Estates, a Hyderabad based real estate developer, said that several factors have fueling the demand for housing, encompassing a strong desire for homeownership, aspirations to upgrade to more spacious and luxurious residences, and investments in vacation homes for leisure or potential returns in the real estate market. “A robust equity market and a thriving economy further amplify the housing demand across various segments. Importantly, this demand isn't confined to specific cities or regions; it is widespread across the nation. This upward trajectory in housing demand is projected to persist, bolstered by significant infrastructure projects and industrial developments in numerous cities. Cities like Hyderabad are emerging as focal points for IT and BFSI sectors, attracting a burgeoning influx of young talent. Consequently, Hyderabad is experiencing remarkable growth, outpacing many other urban centers in the country.”
Mohit Jain, Managing Director of Krisumi Corporation added, “After regaining its shine as an asset class, real estate has witnessed remarkable momentum in the past couple of years. Buoyed by economic growth, rising incomes, and a renewed emphasis on homeownership, we expect housing demand to stay robust for the next few years, with luxury properties paving the way due to homebuyers increasing preference for spacious and comfortable living in both metros as well as in other cities.”