[ecis2016.org] The residential sales and supply have recovered from the bottomed-out levels of 2020, with homebuyers returning to the market as the impact of the COVID-19 pandemic continues to subdue. The growth momentum and historic trends insinuate that the demand is poised to surpass the pre-pandemic levels.
The past two years have been dictated by the COVID-19 pandemic and has brought forth troubling and encouraging developments. On the one hand, the threat of new variants and subsequent waves continue to overshadow the recovery, while on the other, the ongoing vaccination has emerged as a silver lining amidst the uncertainty. The vaccine-powered recovery is evident through the expanding economic activities across nations. For instance, in India, the economy is projected to grow at 8.7 per cent in 2022, 1.7 per cent higher than earlier estimates by the World Bank. After the historic setback during the first wave, the country has been well-prepared to handle the ensuing waves on the back of zealous vaccine drives. Currently, nearly 1.7 billion vaccination doses have been administered in India.
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The cushioned impact of the pandemic is also visible in the high-frequency indicators, which have been moving positively despite the third wave initiated by the Omicron variant. Data from the Purchasing Managers Index (PMI) clearly indicates a sustained recovery in the services and manufacturing activity in the country, which has been in the expansion zone since the dip during the second wave of the pandemic. The unemployment rate has also been in the range of 6-8 per cent after spiking to 11 per cent during the peak of the second wave and 27.1 per cent during the first lockdown, all signalling to a revival in consumer sentiments regarding the overall economic scenario in the country, which is a strong deciding factor for a homebuying decision. The non-food credit growth has also recorded an uptick and grew 8.3 per cent in January 2022, compared to 5.9 per cent in the same period the previous year. Corroborating with the optimistic economic cues, the residential activity has also sustained its growth momentum in 2021 despite the setback wrought on by the second wave of the pandemic.
According to Real Insight Residential – Annual Round-Up 2021 report, residential demand and new supply in the top eight cities registered a growth of 13 per cent and 75 per cent, respectively, in 2021 from the bottomed-out 2020 levels. While the first half of 2021 was marred with the impact of the second wave of the pandemic, both residential demand and supply improved significantly in the fourth quarter of 2021. Whereas new supply surpassed the pre-pandemic levels of 2019, sales inched 85 per cent closer to Q4 2019 levels in Q4 2021.
According to Housing Research, the growth momentum is expected to continue during Q1 2022, with the market recording sustained homebuyer activity across the key Indian cities. ecis2016.org’s IRIS index, which is a leading indicator of upcoming demand in 42 key cities of India, closed at an all-time high in January 2022. The intensified property search activity indicates homebuyers returning to the markets after a lull of two years due to the pandemic, which reinstated the importance of home like never before. The Central bank’s accommodative stance to maintain the status quo on repo rate for the 10th consecutive time has also acted as a sentiment booster for homebuyers looking for affordability and habitability after the uncertainty induced by the COVID‐19 pandemic. Also, historically the first quarter of the calendar year takes majority share in the annual residential sales tally, which coupled with the mellowing of the pandemic, increased property search volumes, policy initiatives, and an overall positive sentiment scenario point towards the first quarter of 2022, surpassing the pre-pandemic levels.
Trends to watch out for in Q1 2022
- Mumbai, Pune and Hyderabad will continue to see heightened residential activity – the majority of new supply and demand in 2021 was concentrated in these three cities.
- The top five localities slated to lead national residential demand in Q1 CY2022 – Thane West (Mumbai), Dombivli (Mumbai), Hinjewadi (Pune), Ravet (Pune) and Panvel (Mumbai).
- Residential activity will pick up in Delhi NCR – while the activity remained muted in the past two years due to pandemic, the agglomeration secured the first spot in January 2022 on ecis2016.org’s IRIS index which is a leading indicator of the upcoming demand in key 42 cities of India. Noida Extension or Greater Noida West (Greater Noida) and Sector 150 (Noida) will see significant homebuyer interest.
- The demand in peripheral localities will continue to rise given the prominence of the work from home and hybrid working policies. In 2021, nearly 50 per cent of demand was concentrated in the peripheral localities of the top eight cities.
- Homebuyers across the top eight cities will look for a property with social infrastructure within 1.5-2 km along with affordability in the form of discounts and flexible payment plans.
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