Cyclical in nature, housing sector expected to roar ahead

After almost seven years of flat sales, the housing sector witnessed upswing starting Diwali 2020. The October to December 2020 quarter saw reputed developers like Godrej Properties clocking significant sales while Lodha Group reported over Rs. 2,500 crores of bookings in the quarter.

Home buyers now prefer to go with reputed developers who have the capability of timely delivery and quality. In Mumbai for example, brands such as Lodha have an edge because of a strong track record of 57 million square feet delivered, resulting in market share ranging from 20% to 34% in the micro-markets in the region and the capability to cater to ever-evolving consumer needs.

A housing led revival helps in improving GDP figures for India. Construction industry is considered as the second largest employer in the country generating over 5 crores jobs every year. Additionally, it creates more than 4.5 crore jobs either directly or indirectly.  By 2022, the Indian construction space is expected to become the largest employer and set to employ ~7.6 crores people from the current levels of over 6 crores. On the other hand on every house sold, 25% of the value goes to government which helps in nation building.

There is vast chatter on affordability and livability. Speaking of affordability, it is not just the price of the unit but also the prevailing interest rates on home loans since a majority of home purchases are financed via banks and NBFCs. A decade back, home loan rates were in excess of 10%. Now with repo rates at an all-time low of 4 per cent, home loan borrowers who want to purchase their dream house are greatly benefited since home loan interest rates are at an all- time low of ~6.75%. This has the effect of reducing EMIs and making home ownership increasingly affordable...