Housing Sales-to-Supply Ratio Rises to 1.36 Amid Limited Launches in Top 7 Cities

Housing Sales-to-Supply Ratio Rises to 1.36 Amid Limited Launches in Top 7 Cities

Anuj Puri 18/09/2020 2
Housing Sales-to-Supply Ratio Rises to 1.36 Amid Limited Launches in Top 7 Cities

Amidst controlled new housing launches, the residential sales-to-supply ratio has improved to 1.36 currently, as against 0.63 in 2014, reveals the FICCI-ANAROCK report Indian Housing Sector: Disrupted, Transformed & Recovering released at the 14th Annual FICCI Real Estate Summit 2020 today.

The improvement in this critical ratio is indicative of sustained future growth for the housing sector.

Anuj Puri, Chairman - ANAROCK Property Consultants says, "The report also highlights that in the post-COVID-19 era, affordability of mid-income homes, calculated on the ratio of home loan payment to income, will touch its lowest-best at 27% in FY21. It was 53% in FY12 and has been falling y-o-y ever since."

Several factors will influence residential real estate revival in post-COVID-19 times. For instance, property prices have remained range-bound with weighted average prices across the top 7 cities rising only nominally at a CAGR of 3% between 2012 to 2019. This is significantly lower than the prevailing inflation rates and income growth.

“In the past, the value of real estate under construction increased from USD 94 Bn in 2009 to USD 243 Bn as of H1 2020 - a 2.6X increase," says Puri. "During the same period, the share of residential real estate grew from 49% to 88%, indicating the massive expansion of this segment.”

As policy reforms and financial stress continue to eliminate weaker players, listed developers’ sales are staying on course in the current scenario. While overall sales have declined, listed developers continue to thrive on the back of homebuyers' increasing preference for organized players. ANAROCK research’s consumer sentiment survey during lockdown also highlighted that 62% of prospective buyers prefer to buy a home from branded developers, even if it comes at a higher cost.

Corporate developers’ earlier focus on high-end residential assets has now broadened to cover a wider demand spectrum. Along with luxury projects, they are expanding their footprints in affordable and mid-segment projects as well. The success mantras of the future now are:

  1. Embrace the digital/ virtual route
  2. Focus on Business Continuity Plan (BCP)
  3. Zero in on salaried end-users and NRIs, expand affordable and mid-segment portfolios

Other Key Highlights of the Report

With homes now doubling as workplaces and for online education, some interesting new trends are becoming evident in residential real estate:

  • WFH option and online schooling - demand for 2.5 BHK and 3.5 BHK configurations has increased
  • Home layouts are changing - functional and flexible homes in top demand.
  • Plotted developments becoming popular - independent and semi-independent formats like villas or row houses provide better social distancing
  • Housing requirements in tier 2 and 3 cities to increase - with reverse migration happening across the country.
  • Luxury projects garnering renewed interest - from a TG that is less financially impacted by the pandemic

Download the full report - Indian Housing Sector: Disrupted, Transformed & Recovering

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  • Ben Foster

    While India is selling houses and moving forward, the Midlands are stuck.

  • Tom Hailie

    New trends are emerging in real estate

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Anuj Puri

Real Estate Expert

Anuj Puri, Chairman of ANAROCK Group is a highly respected industry authority and thought leader with 30 years' experience in leveraging Indian and global real estate opportunities. His company ANAROCK has a staff complement of over 1800 qualified and experienced professional, with offices in all major markets in the country, dedicated services in Dubai and a global footprint with over 80,000 preferred channel partners.

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