It was perhaps the bottom of the U-curve for housing prices in India and, the only direction was up. After six-seven years of steady decline, the property prices have started showing some improvements.
While developers will watch out for the trend in inventory position, a supply crunch will mean that the prices would inch up, says an analysis by Motilal Oswal. Over the next four to five years, it is expected that the prices will be 1.3-1.4 times the current levels, or 4-5 percent on a CAGR basis, it said.
The key takeaway from the study was that the residential sector is finally seeing positive sentiment with respect to a revival in demand after a prolonged hiatus, and that the momentum is here to stay.
Prices have hit rockbottom and are expected to pick up gradually in the near term as demand would slowly outgrow supplies, said the study.
The demand momentum for housing has picked up over the last two months, continuing from where it left before the second COVID wave, and has absorbed a large part of the completed and near-complete inventory across markets.
Consumers have realised the importance of home ownership and upgrade demand, backed by strong IT hiring and salary revisions, it said.
The demand-supply balance will ensure the recovery has more legs. Further, infrastructure development is leading to incremental habitable locations in urban centeres, making sure that demand for housing is here to stay, it said.
Consolidation is expected to benefit large public and private organised players, the analysis said. Stronger players, who could sustain the cash crunch, have survived, while a sizeable chunk of players has exited the sector.
Over the next 6-12 months, supply will continue to be restricted to large listed and private players. Big bang expansions are expected only from these players, while smaller players will consolidate, it said.
Over the long term, 20-25 players are likely to dominate the market versus the current developer count of 400-500, it said.