India's residential property market has been recovering due to the rising importance of having homeownership
Affordable housing segment -- apartments priced up to Rs 45 lakh -- is contributing nearly half of the total demand in the primary residential market across eight major cities, real estate brokerage firm PropTiger.com said on Friday.
Addressing a webinar, PropTiger COO Mani Rangarajan said the April-June quarter may witness demand slowdown because of the second wave of the Covid-19 pandemic but sales should pick up in the second half of this year.
He ruled out price correction in the primary housing market, saying that builders have been operating at a thin profit margin.
In its Real Insight report for January-March 2021 quarter, PropTiger found out that around 45 per cent of sales in January-March 2021 were contributed by the affordable housing segment.
The consultant further said that around 26 per cent of the sales were in Rs 45-75 lakh price bracket, 10 per cent in Rs 75 lakh to Rs 1 crore and 19 per cent above Rs 1 crore.
Out of the total sales, 44 per cent contribution came from two-bedroom apartments.
Earlier this month, PropTiger reported that housing sales across eight major cities declined by 5 per cent year-on-year at 66,176 units.
Mumbai, Pune, and Bengaluru witnessed a fall in sales, while the other five cities -- Delhi-NCR, Kolkata, Chennai, Hyderabad, and Ahmedabad--- saw growth in demand.
"Affordable housing segment has been a top performer since the last few years. The government is providing tax incentives and interest subsidies to boost demand in this segment and achieve its target of Housing for All," said Mani Rangarajan, who is also COO of Housing.com and Makaan.com.
After a huge setback during the April-June quarter of 2020, he said India's residential property market has been recovering month-on-month on pent-up demand, festival sales, and the rising importance of having homeownership.
Low interest on home loans and stamp duty cut by the Maharashtra government has also helped in the recovery process.
However, Rangarajan said the recent outbreak of the second wave of COVID-19 and semi-lockdown in many states may put a brake on the revival of the housing demand seen during the last nine months.
"Though It is too early to assess the impact, we need to keep in mind that the real estate industry is more prepared this time to handle the situation. The sector has taken a giant leap in the adoption of digital tools for marketing and sales during the last year," he observed.
On the supply side, PropTiger and Housing.com Research Head Ankita Sood said the new supply grew 49 per cent year-on-year to 53,037 units across these eight cities during January-March 2021.
New supply continues to be concentrated in less than Rs 45 lakh category, with 45 per cent share from the overall pie, she added.
The mid-segment (Rs 45–75 lakh price bracket) recorded a share of 27 percent of the total supply in the first quarter.
More than Rs 75 lakh price bracket accounted for 28 percent of the total supply.
"Weighted average prices for newly launched projects in a majority of India's top cities remained muted in the past few quarters, with prices appreciating marginally in the range of 1–3 percent annually," the report said.