Indian housing market set for a reset in 2022
Expert opinion points to a recovery, while the issue of affordability is split down the middle, with average Indian house prices forecast to rise 4.5% next year and 5.5% in 2023.
India's stuttering housing market will find its footing next year, boosted by a recovery from the pandemic and easy monetary policy, according to property analysts who were, however, split on the issue of affordability.
The 11-24 August poll predicted house prices would grow on average 2.5% nationwide this year, an upgrade from next to nothing, 0.75%, expected in a survey three months ago.
But that forecast was significantly more modest than expectations in similar Reuters polls for most major housing markets, which are already up in double digits this year.
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Average Indian house prices were forecast to rise 4.5% next year and 5.5% in 2023, outstripping consumer price inflation by then, partly because raw material costs for builders are due to keep rising.
Demand is buoyant
"The trend of demand remaining buoyant can be attributed to several factors ... sustained low interest rates, an overall improvement in the job market, resumed economic activity ... and an increasing desire to own physical assets during times of unprecedented uncertainty," said Anuj Puri, chairman at ANAROCK Property Consultants.
"With the vaccination drive gaining significant momentum and the spread of COVID-19 under better control for now,2023 will very likely emerge as the new peak year," he said.
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The peak in the housing market could have a direct positive bearing on the Indian government’s scheme of ensuring that every citizen should have a house made out of brick and mortar. As India Global Business had discussed this scheme earlier, reenergising this project, in India’s urban and rural areas, would act as a catalyst to boost steel, cement, logistics and with it nearly 250 other sectors. Moreover, it would also provide inclusion among economically weaker sections of society (EWS) as well as low-income groups (LIG). The Pradhan Mantri Awas Yojana-Gramin and the Pradhan Mantri Awas Yojana-Urban are, therefore, important cases in point. A basket of options is adopted to ensure inclusion of a greater number of people depending on their income, finance and availability of land.
The revival of the housing sector, should the government find a way to control a possible third wave of the pandemic, will have a direct, positive bearing on industries such as steel, cement, building other materials, logistics and consequently, to employment generation across the country.
- Inputs from Reuters