With both sales and new launches reflecting promising numbers, the year 2022 is expected to be a strong year for the housing sector. But will this upbeat economic momentum continue in the festive season as well? Let’s find out!
Once again, the festive season is around the corner, and, the real estate sector is betting high on it. Starting from Ganesh Chaturthi till the New year, this festive season is not only an opportune time for developers but also viewed to be an auspicious time to invest in residential properties by many. Markets are usually flooded with several discounts and lucrative offers attracting more home buyers to conclude the deals.
Further, marked by the robust launch of new residential units along with a plethora of benefits on the table, this much-awaited period of the year is when a number of home buyers go for premium purchases, giving a significant push to the housing sector.
However, despite the current uncertainties around the globe, overall optimism in the housing segment is relatively higher. While there can be several reasons behind the same, at Square Yards we delineated a few of them for our readers. Read ahead.
Table of contents
Strong Home Buying Sentiments Ruling the Market
In the past two years, homeownership has become a compelling need for many. The want for stability and security is inching up on the priority list of buyers backed by consumer confidence in the prevailing scenario, and there has been a significant rise in the importance of owning a home.
Interestingly, despite the price appreciation by developers across top cities and a 140bps repo rate hike by the Reserve Bank of India, housing demand continues to present a strong (firm) footing. Also, more and more buyers are coming forward to seal the deal as housing sales continue to remain strong. Therefore, it is quite likely that this festive season will be one of those periods when most of the demand sees conversion as home buyers prefer going forward with planned purchases.
Upbeat Residential Activity Despite Several Headwinds
Thankfully, even though there were a number of externalities adversely affecting the housing sector, the new launches and sales have started picking up in the recent past due to a host of factors. For instance, according to Square Yards data, residential activity remained quite upbeat across the top six cities with about 81,000 new launches in Q1 2022 and 79,000+ new residential units launched in Q2 2022.
Adding on, backed by rising demand for residential units, both new launches and sales in the housing sector have remained firmly on a growth trajectory. While the continued inflation and increasing cost of financing can be expected to impact stakeholder sentiments in the short term, the overall second half of 2022 is highly probable to remain strong.
Premium properties to garner buyers’ interest
Stemmed as a result of work from home or hybrid model of working, in the last few months, there has been a surge in demand for larger and more spacious homes. More homebuyers look forward to investing in residential units with dedicated office space, balconies, gyms, extra rooms, and modern amenities. And this trend is expected to continue for the rest of the year.
Interestingly, festive season is the time when even several developers also provide hefty discounts on premium properties (residential properties worth >Rs 1Crore). The push which nudges more buyers to close on their deals at a relatively lower price compared to any other time of the year.
For instance, according to Square Yards data, in Q3 2021 (festive season), the sale of premium properties recorded one of the peaks, accounting for 15% of the total residential units sold across the top six Indian cities. In Q4 2021 also, about 12% of the total properties sold were in the price band of over Rs 1 Crore.
Moreover, during the festive season, as a majority of the sales momentum is based on strong fundamentals, like demand from genuine buyers rather than speculators, sales are usually higher compared to other quarters. As per Square Yards data, Q3 2021 noted a whopping Q-o-Q rise of >80% in the sale of residential units as compared to Q2 2021. Indicating similar strong on-ground conversions in Q4 2021 also, and the number of units sold was significantly higher than in the first two quarters of 2021.
Resonating strong footing, in the upcoming 2022 festive season also, one can expect similar trends are anticipated to gain momentum. On the account of major drivers such as pent-up demand and relatively lower interest rates as compared to pre-pandemic levels, a large number of buyers are expected to buy homes.
Surging Housing Prices with Each Passing Quarter
As the housing sector faces the “new normal”, in the past year home prices across the country have spiked significantly. In cities like MMR and Pune’s average property prices per sq. ft. have witnessed a rise of 5-10%. Whereas in Noida, Hyderabad, and Gurugram, the yearly rise in property prices was in the range of 2%- 7% at least. Visibly after years of stagnant growth, a resurgence in demand for residential property has led to an uptick in property prices across the country.
In view of the above, even as housing prices have increased in the past quarters, amidst the rising cost of construction materials, both developers, as well as homebuyers, are quite aware that property prices are further going to inch up.
During the past few months, the property prices have corrected and there is little room left for builders to correct prices further. This has led more buyers to move from the sidelines to the mainstream, eyeing the discounts and offers at hand as the “cost of waiting” is more likely to be high for end-buyers. Attributed to it, the housing markets can be seen to witness end user-driven markets and a lot of homebuyers who are eager to close the deals in this festive season.
Festive season: The Conventional Annual High Point
Originating from the traditional sentiment, generally, the Indian festive season is widely taken as the right time to invest in wealth-building assets. The homebuying sentiments conventionally have always been higher during the festive season compared to other quarters.
Data shows that apart from noting significant new launches, the third quarter of the year (festive season) usually generates a higher percentage of annual sales.
In the year 2022, in the backdrop of strong consumer demand and favourable base effect, sales across the top cities increased significantly in the first half of this year compared to the same period last year. Because of this, more experts are expecting strong sales growth to continue even in the current festive season.
This year is also poised to be staged as an annual high point for residential real estate and the right time to invest in wealth-creating assets.
What Should the Buyer Do This Festive Season?
As all eyes are glued to the festive season, it becomes imperative for the buyers to understand whether it is time to move from the sidelines to the arena of buying a property or wait a little more.
Developers are all set to woo buyers with several discounts, freebies, and convenient payment plans but hey, don’t let the glitter of the offers blind you to key considerations. At the outset, first confirm about the non-negotiable factors such as location, infrastructure, and the developer’s record. Then accordingly, be a prudent buyer and get a good deal this festive season.
Interested to know about localities where people bought homes in the last few years in your city? Check out the Data intelligence data provided by Square Yards and step into a well-informed and hassle-free home-buying journey.
