The Indian housing market has experienced some turbulent times over the last couple of years. Prices, demand, and construction costs have been volatile, resulting in an unpredictable situation for those wanting to buy or sell a property. But what is the situation now; and are things looking more promising for the future?
The current state of the market
Over the next four years, the Indian housing sector is expected to surpass $650 billion; equivalent to 13% of the country’s GDP. By 2030, that figure jumps to $1 trillion, signalling ongoing success and confidence in the sector.
A lot of this growth is down to the middle class and young families who are finding themselves more financially secure. There has been an increase in mortgage applications, driven in part by lower interest rates. Many smaller areas are also seeing increases in first-time buyers using mortgages. Following the digital trend, many house hunters turn to online mortgage advice and broker sites like Trussle to help them get a better deal. They input their data on deposits and income, and the site will present a range of different options in just a few seconds. This is very helpful for buyers as it makes the process more transparent, efficient, and secure.
What’s driving growth?
There are a variety of factors that are driving growth across India. Firstly, demand is continuing to increase, especially in the residential sector. The central government has laid out plans to build 20 million affordable houses by the end of 2022. This, in turn, will increase demand for commercial premises such as shop units and office space.
Secondly, there is demand from specific sectors such as education and healthcare. eCommerce is also experiencing a boom as more Indians look to shop online. This has led to more eCommerce businesses looking for new or additional premises such as offices and warehouses. In turn, logistic companies are expanding into new hubs throughout the country, further driving new opportunities.
Additionally, there has been a marked increase in private investment in the real estate sector. Statistics show that $5 billion was invested in real estate by institutions during 2020. More than $3.2 billion was recorded in private equity investments in just four deals in Q1.
Gujarat and beyond
In Gujarat, house prices are on the increase. Some experts have predicted that prices could increase by 30% over the next few months. This has been attributed to the rise in raw material costs, as well as demand. But this isn’t necessarily bad news for buyers. If they are swift off the mark, there is still time to get a bargain. This means they have a good chance at getting a return on their investment, plus profit if prices continue to rise. Particularly hot areas for investment include Vadodara, Surat, Halol, and Ahmedabad- all of which have been highlighted by experts as having potential.
The housing market’s performance will ultimately be linked to the way the economy recovers from the COVID-19 pandemic. The rollout of vaccines and management of any subsequent waves will impact its stability and profitability. But right now, there is hope on the horizon!
