Affordability Improvements on the Horizon

The affordability outlook for India’s residential market is promising. With the Reserve Bank of India (RBI) signaling a shift towards a neutral stance on monetary policy, a potential rate cut of 50 basis points over the next 12 months is expected to enhance affordability. This, combined with moderate price growth and rising household incomes, will support an improvement in affordability levels across the country’s key real estate markets.

JLL’s HPAI predicts that Mumbai and Pune will approach near-optimal affordability by 2025, meaning that the average household income in these cities will be sufficient to qualify for home loans based on the prevailing property prices. Kolkata, on the other hand, is expected to maintain its lead as the most affordable major city, potentially reaching new affordability peaks.

While Delhi NCR and southern cities like Bengaluru, Hyderabad, and Chennai are also set to see improved affordability, they are likely to remain below their peak affordability levels. However, even these cities will experience better affordability than in previous years.

Record Residential Sales Expected

The anticipated improvements in affordability come at a time of strong growth in India’s residential market. Residential sales are forecast to reach 305,000-310,000 units in 2024, and further growth is expected in 2025, potentially pushing sales to a new peak of 340,000-350,000 units. This surge in sales reflects a growing demand for housing, driven by evolving homeownership dynamics and rising household incomes.

Despite the challenges posed by higher property prices and interest rates in recent years, the market remains resilient, with a sustained bull run driven by strong homebuyer demand. The expected interest rate cuts, alongside moderating price growth and continued income increases, are poised to further fuel the market’s momentum over the next 12-18 months.

Factors Driving Affordability Shifts

JLL’s Chief Economist, Dr. Samantak Das, explains that while the overall economic outlook remains soft, India is still projected to be one of the best-performing large economies globally, supporting steady growth in household incomes. He notes that in 2021, affordability across all major markets reached peak levels. However, rising property prices and persistent interest rates caused affordability to dip in 2022 and 2023. With the anticipated interest rate cuts and moderate price growth, affordability levels are expected to improve to their best since 2022, creating a favorable environment for homebuyers.

The report also highlights the significant growth in real estate prices over the past decade. Hyderabad leads with a 132% price increase since 2011, followed by Bengaluru at 116%, and Delhi NCR at 98%. On the income front, Mumbai has experienced the highest growth, with a 189% increase in household incomes over the same period.

Future Outlook for the Market

Looking ahead, Siva Krishnan, Senior Managing Director at JLL, notes that the combination of strong income growth, potential interest rate reductions, and moderating price growth is expected to improve affordability across India’s key markets. This will ensure continued activity in the residential market, with sustained demand despite ongoing price increases.

JLL’s HPAI will continue to be a vital tool for aligning homebuyers’ affordability with suitable property offerings, ensuring that market demand remains resilient and responsive to economic shifts. The report emphasizes that strategic policy interventions, along with continued improvements in household incomes, will be critical in sustaining demand elasticity in India’s residential real estate market.

Conclusion

India’s residential real estate sector is on track to see improved affordability by 2025, driven by expected interest rate cuts and rising incomes. While cities like Mumbai and Pune are expected to approach optimal affordability, Kolkata is set to maintain its position as the most affordable major market. As residential sales continue to climb, India’s housing market is poised for a resilient and robust future, ensuring strong performance even in the face of rising prices.

Also Read: Oberoi Realty Reports Strong H1FY25 and Q2FY25 Results: Booking Value at ₹2,509.45 Crores; PBT Rises to ₹1,557.50 Crores

The post India’s Residential Market Set for Improved Affordability in 2025, Driven by Interest Rate Cuts appeared first on Square Feat India.

Affordability Trends

The report highlights a significant shift in housing affordability. Between 2020 and 2024, household incomes across India’s top 10 cities grew at a compound annual growth rate (CAGR) of 5.4%, while property prices surged at a CAGR of 9.3%. As a result, the Property Price to Annual Household Income Ratio (P/I Ratio) has risen from 6.6 in 2020 to 7.5 in 2024, surpassing the globally accepted benchmark of 5.

Based on the P/I Ratio, Chennai, Ahmedabad, and Kolkata are identified as the most affordable cities for residential investments in 2024, each with a ratio of 5. In contrast, the Mumbai Metropolitan Region (MMR) and Delhi are the least affordable, with ratios of 14.3 and 10.1, respectively.

Rising EMI Burden

The report also reveals a growing burden on home buyers, with the EMI-to-monthly income ratio increasing from 46% in 2020 to 61% in 2024. This trend indicates mounting affordability concerns, particularly in major metros. The ratio is notably high in MMR (116%), New Delhi (82%), Gurugram (61%), and Hyderabad (61%). Conversely, cities like Ahmedabad (41%), Chennai (41%), and Kolkata (47%) remain relatively more affordable.

Market Outlook

Magicbricks CEO Sudhir Pai noted that residential investments were most affordable between late 2021 and 2022 due to low interest rates and recovering incomes. However, increased demand and rising prices have since challenged affordability. The report predicts a potential equilibrium in the market, with a slowdown in price growth expected due to anticipated increases in residential supply.

Also Read: India Achieves Landmark Transparency in Global Real Estate Market

Investment Insights

The price-to-annual income ratio provides insights into housing affordability across cities. Ratios below 5 indicate affordability, while ratios above 8 suggest high unaffordability. The current data underscores the varying degrees of affordability in different Indian cities, with Chennai, Ahmedabad, and Kolkata emerging as favorable investment destinations amidst rising costs nationwide.

The post Chennai, Ahmedabad, and Kolkata: Most Affordable Metros for Residential Investments, Reports Magicbricks appeared first on Square Feat India.

In a troubling development for the Indian real estate market, over 1,600 housing projects have been stalled across the country, leaving more than 5 lakh families in limbo. This crisis has impacted a staggering 511,814 housing units, highlighting a significant issue in the sector.

Breakdown of Stalled Projects Across Major Cities

Tier I Cities:

• Greater Noida: 74,645 units
• Gurugram: 158 projects, 52,509 units
• Noida: 103 projects, 41,438 units
• Ghaziabad: 50 projects, 15,278 units
• Faridabad: 16 projects, 7,060 units
• New Delhi: 1 project, 900 units
• Mumbai: 234 projects, 37,883 units
• Navi Mumbai: 125 projects, 28,466 units
• Thane: 186 projects, 57,520 units
• Pune: 172 projects, 24,129 units
• Bengaluru: 225 projects, 39,908 units
• Kolkata: 82 projects, 24,174 units
• Chennai: 92 projects, 21,867 units
• Hyderabad: 25 projects, 6,169 units

Total for Tier I Cities:

• Projects: 1,573
• Units: 468,035

Tier II Cities:

• Bhiwadi: 13,393 units
• Lucknow: 13,024 units
• Jaipur: 9,862 units
• Bhopal: 7,500 units

Total for Tier II Cities:

• Projects: 109
• Units: 43,779

Grand Total Nationwide:

• Projects: 1,682
• Units: 511,814

The data, sourced from PropEquity, underscores the urgent need for intervention to address the stalled projects and help restore progress in the housing sector.

Also Read: MHADA to Host Webinar on August 19th to Guide Applicants for Mumbai Housing Lottery

The post Housing Crisis in India: Over 1,600 Projects Stalled Affecting 5 Lakh Families appeared first on Square Feat India.

Significant rent increases were observed in Navi Mumbai, Hyderabad, and Ahmedabad. Navi Mumbai saw a rise of 6.2% QoQ, with average rents climbing from INR 28.99 psf in the first quarter of 2024 to INR 30.78 psf in the second quarter. Hyderabad experienced a 4.2% QoQ increase, with rents moving from INR 22.01 psf to INR 22.93 psf. Ahmedabad reported a 4% QoQ rise, with rents increasing from INR 17.25 psf to INR 17.94 psf.

The report also noted a 14.8% QoQ increase in rental demand, following a 16% QoQ rise in the previous quarter. Conversely, supply across these cities decreased by 2.2% QoQ due to high absorption rates, contributing to the uptick in rents.

Cities with the highest rents include Mumbai at INR 82.28 psf per month, Delhi at INR 33.72 psf, and Thane at INR 29.84 psf. Other cities reported varying rental averages, with Greater Noida at INR 14.52 psf, Noida at INR 20.10 psf, and Bengaluru at INR 28 psf.

Abhishek Bhadra, Head of Research at Magicbricks, commented on the trends: “With economic activity on the rise, we expect continued growth in both rental demand and rent prices in the short to medium term. The supply of rental units is likely to improve as more under-construction properties become available. This dynamic presents a favorable opportunity for landlords and investors, encouraging increased participation in the rental market.”

The report highlights that despite the overall average rental yield across the top 13 cities being 3.6%, Ahmedabad, Pune, and Kolkata delivered the highest rental yields at 3.8%.

City-wise Rental Metrics:

• Ahmedabad: Demand increased by 30.1% QoQ and 15.2% YoY. Supply decreased by 0.8% QoQ and 6.0% YoY. Rents rose by 4.0% QoQ and 10.3% YoY.
• Bengaluru: Demand remained stable at 0.3% QoQ but decreased by 11.0% YoY. Supply fell by 4.8% QoQ and 11.5% YoY. Rents increased by 3.7% QoQ and 24.6% YoY.
• Chennai: Demand grew by 6.9% QoQ and 6.9% YoY. Supply decreased by 13.2% QoQ and 37.3% YoY. Rents increased by 2.0% QoQ and 19.1% YoY.
• Delhi: Demand surged by 47.2% QoQ and 18.0% YoY. Supply slightly decreased by 0.1% QoQ and 9.5% YoY. Rents rose by 1.7% QoQ and 14.5% YoY.
• Greater Noida: Demand increased by 44.0% QoQ and 3.2% YoY. Supply rose by 4.4% QoQ and 29.0% YoY. Rents increased by 2.1% QoQ and 26.7% YoY.
• Gurugram: Demand grew by 24.8% QoQ and decreased by 7.6% YoY. Supply increased by 10.2% QoQ and 25.9% YoY. Rents rose by 2.8% QoQ and 20.6% YoY.
• Hyderabad: Demand rose by 1.7% QoQ but decreased by 8.5% YoY. Supply fell by 6.2% QoQ and 3.9% YoY. Rents increased by 4.2% QoQ and 23.1% YoY.
• Kolkata: Demand increased by 24.4% QoQ and decreased by 0.9% YoY. Supply decreased by 0.7% QoQ and 9.6% YoY. Rents fell by 2.3% QoQ but rose by 8.5% YoY.
• Mumbai: Demand increased by 16.0% QoQ and 2.2% YoY. Supply fell by 3.4% QoQ and 3.0% YoY. Rents rose by 3.8% QoQ and 10.5% YoY.
• Navi Mumbai: Demand increased by 22.2% QoQ and 13.8% YoY. Supply fell by 2.4% QoQ and 8.1% YoY. Rents rose by 6.2% QoQ and 20.7% YoY.
• Noida: Demand increased by 31.3% QoQ and 1.4% YoY. Supply rose by 1.2% QoQ and 32.4% YoY. Rents increased by 3.8% QoQ and 19.3% YoY.
• Pune: Demand increased by 18.1% QoQ and decreased by 3.6% YoY. Supply fell by 4.0% QoQ and 1.1% YoY. Rents rose by 1.7% QoQ and 12.3% YoY.
• Thane: Demand rose by 14.7% QoQ but fell by 18.8% YoY. Supply decreased by 4.3% QoQ and increased by 1.4% YoY. Rents fell by 3.2% QoQ and 18.7% YoY.

Source: Magicbricks Research

Also Read: Tamannaah Bhatia rents out 1 Property, Mortgages another 3

The post Rents Rise by 2.6% QoQ Across 13 Key Indian Cities; Ahmedabad, Pune, and Kolkata Lead in Rental Yields: Magicbricks Report appeared first on Square Feat India.

Gaurav Pandey, MD & CEO, Godrej Properties, said, “We are happy to acquire this land parcel in one of the premium locations in Kolkata. The demand for luxury realty has been strong over the past few years. This will be our second luxury development in the city, and we aim to build an outstanding residential community that creates long term value for its residents.”  

Also Read: Godrej Properties buys Raj Kapoor’s Bungalow for ₹100 Cr

The post Godrej Properties to acquire land for a luxury residential project in Kolkata appeared first on Square Feat India.

By Varun Singh

Notwithstanding the devastating 2nd wave of COVID-19, Indian residential real estate staged a convincing comeback in 2021. ANAROCK data reveals that approx. 2.37 lakh units were launched across the top 7 cities during the year, touching the pre-COVID levels of 2019s. Yearly, new launches rose by 85% in 2021 over 2020.

Housing sales rose 71% Y-o-Y in 2021 with approx. 2.37 lakh units sold, thus reaching 90% of pre-COVID 2019 levels. MMR recorded the highest sales at 76,400 units, followed by NCR with approx. 40,050 units sold.

Of approx. 2.37 lakh units launched in 2021, the mid-segment (INR 40 lakh to INR 80 lakh) had the maximum share with 39%, followed by the affordable segment (priced under INR 40 lakh) with a 26% share. The premium segment (priced between INR 80 lakh to INR 1.5 Cr) had a 25% share.

Anuj Puri, Chairman – ANAROCK Group, says, “Despite the pandemic, 2021 was a fantastic year for the Indian housing sector. More or less anequal number of homes were launched and sold. The fact that launches were back to pre-COVID levels is very significant, and housing sales fell short of 2019 by a mere 10%. Of the four quarters, Q4 2021 was by far the best, with housing sales in the top 7 cities attaining a new high of approx. 90,860 units in Q4 2021. This was the highest quarterly sales performance since 2015.”

A tremendous rise in homeownership aspirations was aptly supported by developer discounts and offers, government incentives like Maharashtra’s stamp duty cut, and lenders maintaining decadal-low interest rates.

“Extrapolating on the performance in 2021, 2022 will see very satisfactory growth as long as the coronavirus pandemic remains in check in India,” says Puri. “Various trends will shape the sector in 2022 – Grade A developers will corner more market share, and sales will come back to the pre-pandemic levels of 2019. However, input cost pressure and supply chain issues may induce a 5-8% increase in property prices. End-users will remain the dominant market force, and peripheral areas of the larger cities will continue to see both supply and demand traction.”

New Launch Overview: 2021 vs. 2020

Y-o-Y, the top 7 cities saw approx. 2,36,700 new unitslaunched in entire 2021, against 1,28,000 units in 2020 – a significant increase of 85%, which put new launches back on par with the pre-pandemic 2019 levels.

The key cities contributing to launches in 2021 were MMR (Mumbai Metropolitan Region), Hyderabad, Pune, and NCR – together accounting for 76% of supply additions:

• MMR saw approx. 56,880 units launched in 2021 – a significant rise of over 88% over 2020. Approx. 58% of the new supply was added in the sub-INR 80 lakh budget segment
• Hyderabad added approx. 51,470 units in 2021 – a yearlyincrease of 144% over 2020 and a 71% increase over pre-COVID 2019. Approx. 81% new supply was added in the mid-segment (INR 40 lakh to INR 80 lakh) and the premium segment (INR 80 lakh to INR 1.5 Cr budget range)
• NCR added 31,710 new units in 2021 compared to 18,530 units in 2020 – a significant rise of 71%. Approx. 52% of the new supply was added in the mid and premium segments
• Pune added 39,870 units in 2021, a massive jump of 67% over 2020. Approx. 57% of the new supply was added in the mid-segment
• Bengaluru added approx. 30,650 units in 2021, an increase of 43% over 2020. Approx. 72% of the new supply was added in the mid and premium segments
• Kolkata added approx. 13,750 units in 2021, a massive increase of 290% over 2020. Approx. 71% of the new supply was added in the affordable segment
• Chennai added approx. 12,370 units in 2021, an increase of 35% over 2020. Approx. 62% of the new supply was added in sub INR 80 lakh budget segments

Overall Sales Overview: 2021 vs. 2020

Altogether, the top 7 cities saw approx. 2,36,530 housing units sold in the whole of 2021, against 1,38,350 units in 2020 – a hefty increase of 71%.

• MMR saw maximum yearly sales of approx. 76,400 units among the top cities. City sales increased by 72% – from 44,320 units in 2020 to 76,400 units in 2021 (due to a significant increase of 88% in new launch supply)
• Hyderabad saw a huge 197% increase in sales – from 8,560 units in 2020 to 25,410 in 2021
• NCR saw sales increase by 73% – from 23,210 units in 2020 to 40,050 units in 2021
• Pune saw a significant sales increase of 53% – from 23,460 units in 2020 to 35,980 units in 2021
• Bengaluru saw sales increase by 33% – from 24,910 units in 2020 to 33,080 units in 2021
• Chennai saw a hefty 86% increase in sales – from 6,740 units in 2020 to 12,530 units in 2021
• Kolkata saw an 83% increase in sales – from 7,150 units in 2020 to 13,080 units in 2021

Housing Inventory Status – 2021-end:

Increased launches and overall absorption in the top 7 cities in 2021, when compared to 2020, resulted in minor changes in available inventory. However, compared to 2019, there has been a 2% reduction in available inventory by the end of 2021. Data indicates that the top 7 cities altogether have total unsold stock of approx. 6.38 lakh units as of 2021-end. Among the top 7 cities, MMR and NCR saw a yearly decline of 10% and 5%, respectively.

Price Movements

Average residential property prices across the top cities increased by 3-5% in 2021 compared to 2020. Bengaluru and MMR witnessed the highest price increase of 5%, while Chennai and Kolkata witnessed a 3% increase.

Also Read: 10 Most Expensive Real Estate Deals of India in 2021

The post Which City Sold the highest number of Homes in 2021? appeared first on Square Feat India.