Mid-Segment Housing Will Continue to Drive Indian Housing Market

By : 360 Realtors

06 December, 2019

Mid-segment housing will continue to drive the Indian housing market in the times to come, despite moderation in sentiments. Despite a slowdown in economic climate that has also impacted Indian Real Estate, especially the residential market, most of the markets in India, barring a few such as Kolkata, are witnessing a stable price without any visible sign of spurt in property prices. A massive unsold inventory to the tune to around 175,000 is further dampening the outlook of the market. A large pile of inventories is in areas such as Delhi NCR & Mumbai.

However, the silver lining is that India with a population of 1.2 billion individuals, an unprecedented rate of urbanization & an expansive middle class represents a massive amount of aggregate housing demand all around the nation. The growth in the residential sector will be underpinned by middle-income & affordable housing demand emanating from the end-users.

Housing units priced in the range of INR 50-80 lacs will be some of the most sought-after property segments. As demand for such housing units is spiraling upwards, major Indian developers are also focusing more on this category. It is estimated that in H1 2019, around 30% of the news launches were concentrated in the less than INR 50 Lacs region, much higher when compared to a year before.

A sizable part of such new launches is concentrated around upcoming urban corridors, suburban areas, industrial parks & IT-zones. In Bangalore, upcoming micro-markets such as Hosur Road, Kanakapura Road, Hebbal, Yeshwantpura, etc. are witnessing new launches from major Grade-A developers. In Gurgaon, Dwarka Expressway, Sohna, New Gurgaon, etc. are garnering developer interest. In Mumbai, new markets such as Thane & Beyond are getting maximum traction as prices are quite affordable here.

The government’s recent move to infuse INR 25,000 crores will further be a force-multiplier. Although the amount is still a little short looking at the magnitude of unsold inventories, it will help in renewing optimism in the current market scenario. There are numerous developers who are midway of their construction but are unable to complete & sell their projects further due to lack of funds. The financial package will be able to turn around their inventory & strengthen their poor balance sheets. The new funds will be utilized to further finish their projects, thereby acting as a true force multiplier.

In the longer run, the structural demand for housing in India looks upbeat, driven by more growth in urbanization, expansion in the home mortgage & healthy Indian middle class. Besides, favorable demography will feed into more housing demand. More than half of the Indian population is less than 25 years old. Sooner or later, they will become potential homebuyers, thereby pushing ahead the demand. A majority of them will prefer affordable or mid-income housing for their end-use.