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Housing Sales-to-Supply Ratio Rises to 1.36 Amid Limited Launches: FICCI-ANAROCK Report
In 2014, the ratio was just 0.63; improvement is a good indicator of housing sector’s future growth potential affordability of mid-income homes to be lowest-best at 27% in FY21 versus 53% in FY1, the report states.
Photo Credit : Ritesh Sharma
Amidst controlled new housing launches, the residential sales-to-supply ratio has improved to 1.36 currently, as against 0.63 in 2014, showed the FICCI-ANAROCK report titled 'Indian Housing Sector: Disrupted, Transformed & Recovering' which was released at the 14th Annual FICCI Real Estate Summit 2020. The improvement in this critical ratio is indicative of sustained future growth for the housing sector, it said.
Anuj Puri, Chairman - ANAROCK Property Consultants said, "The report also highlights that in the post-COVID-19 era, affordability of mid-income homes, calculated on the ratio of home loan payment to income, will touch its lowest-best at 27% in FY21. It was 53% in FY12 and has been falling y-o-y ever since."
Several factors will influence residential real estate revival in post-COVID-19 times. For instance, property prices have remained range-bound with weighted average prices across the top 7 cities rising only nominally at a CAGR of 3% between 2012 to 2019. This is significantly lower than the prevailing inflation rates and income growth.
“In the past, the value of real estate under construction increased from USD 94 Bn in 2009 to USD 243 Bn as of H1 2020 - a 2.6X increase," says Puri. "During the same period, the share of residential real estate grew from 49% to 88%, indicating the massive expansion of this segment.”
As policy reforms and financial stress continue to eliminate weaker players, listed developers’ sales are staying on course in the current scenario. While overall sales have declined, listed developers continue to thrive on the back of homebuyers' increasing preference for organized players. ANAROCK research’s consumer sentiment survey during lockdown also highlighted that 62% of prospective buyers prefer to buy a home from branded developers, even if it comes at a higher cost.
Corporate developers’ earlier focus on high-end residential assets has now broadened to cover a wider demand spectrum. Along with luxury projects, they are expanding their footprints in affordable and mid-segment projects as well.
Other Key Highlights of the Report
With homes now doubling as workplaces and for online education, some interesting new trends are becoming evident in residential real estate. For example the WFH option and online schooling has led to demand for 2.5 BHK and 3.5 BHK configurations. The home layouts are changing as functional and flexible homes are now in top demand. Plotted developments are becoming popular, the report said. The Independent and semi-independent formats like villas or row houses provide better social distancing, it said. Housing requirements in tier 2 and 3 cities is also increasing with reverse migration happening across the country. The Luxury projects are also garnering renewed interest from a TG that is less financially impacted by the pandemic, it said.