Residential sales in top cities have seen a steady growth in the last two years, in the aftermath of the pandemic. Now, the sales momentum in 2022 is expected to touch an all-time high. However, with interest rate hikes and price rise, will the bull run continue? Mint explains:
Are home sales poised to peak in 2022?
Residential sales during the January-September period have already surpassed the full-year sales of 2021 and preceding years. Homes across price categories have continued to clock sales across the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru, Chennai, Hyderabad, Pune and Kolkata. According to estimates by property advisories, home sales in 2022 are expected to surpass 350,000 units and may even reach close to 400,000 units by the year-end. The October-December quarter is expected to sustain the momentum needed to push it to an all-time peak.
How have NCR and MMR fared?
After a nearly seven-year long slowdown in the housing sector, which mainly impacted NCR and MMR, the two largest property markets, the rise in sales has given both a much-needed breather. MMR and NCR together clocked sales of around 130,450 units in the first nine months of 2022, according to Anarock Property Consultants. Price appreciation across cities has ranged from 10-15% in most cities, though NCR has seen a 20-40% rise in prices. Plot sales which have seen huge traction in NCR in the past two years, have in fact seen a 100% price rise in some cases, as per real estate analytics firm PropEquity.
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Are property market speculators back?
In the last year or so, investors have made a gradual comeback, particularly in property markets such as NCR. However, short-term speculators, who partly created a crisis of sorts in NCR, may still not be back. Consultants believe signs of investors returning to the residential sector are evident with the rise in property prices, plot sales, and a jump in NRI transactions.
What could scuttle the sales momentum?
There is growing concern that the pace of current sales could be thwarted by several factors, including rising home loan rates, uncertainty in the job market and rise in property prices. According to Liases Foras Research, October didn’t witness the kind of festive cheer that was anticipated. Tech firms have already started trimming their workforce—the tech workforce in top cities drove real estate sales over the past two years. Builders, however, are hoping that pent-up demand will help them sail through this phase.
Will further price rise dampen affordability?
Top developers have increased home prices in phases in the last year or so, and may continue to do so going forward. So far, price appreciation doesn’t seem to have impacted the sales momentum. The July-September period, for instance, saw an average price rise of 6%, according to Anarock. However, there seems to be a clear demand-supply mismatch, with demand outstripping supply, which may cause prices to shoot up further. It has to be seen if this will dent homebuying sentiment and affordability in the future.
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