Housing Market to Witness Moderate Growth in 2024-25: India Ratings
The residential real estate market is set to see a robust performance in the upcoming fiscal year, with sales growth projected to be around 17% YoY. However, the rate of housing price growth is expected to slow down to a moderate 3-4%.
Real EstateHousing MarketIndia RatingsSales GrowthEconomic ConditionsReal Estate NewsJan 28, 2025
According to a recent report by India Ratings, sales in the housing sector are expected to witness a robust 17% year-over-year (YoY) growth.
However, this positive trend in sales is expected to be accompanied by a moderation in the rate of housing price growth, which is projected to be around 3-4%.
This forecast is based on several factors that are currently influencing the market.
One of the primary drivers of the sales growth is the improving economic conditions and the recovery in consumer confidence.
The Indian economy has shown resilience in the face of global uncertainties, and this has translated into a more optimistic outlook for the real estate sector.
Moreover, the government's initiatives to boost the housing market, such as the Pradhan Mantri Awas Yojana (PMAY), have played a crucial role in stimulating demand.
The PMAY aims to provide affordable housing to all by 2022, and while the deadline has passed, the scheme continues to be a significant driver of demand in the sector.
The report by India Ratings also highlights the impact of interest rates on the housing market.
Lower interest rates have made home loans more affordable, thereby encouraging more individuals to enter the market.
However, the central bank's recent hints at a possible rate hike in the future could lead to a moderation in this trend.
Another factor contributing to the moderate growth in housing prices is the excess supply in certain segments of the market.
Over the past few years, developers have constructed a significant number of units, leading to an oversupply in certain cities.
This has put downward pressure on prices, especially in the affordable and mid-segment housing categories.
Despite these challenges, the real estate market is expected to remain resilient.
The urbanization trend in India continues to gather pace, with more people moving to cities in search of better job opportunities and living conditions.
This demographic shift is likely to drive demand for housing, particularly in the affordable and mid-segment categories.
In addition, the government's focus on infrastructure development, such as the construction of new roads, metro lines, and other amenities, is expected to boost the real estate market.
These infrastructural improvements are likely to enhance the quality of life in urban areas, making them more attractive to homebuyers.
However, it is important to note that the real estate market is not uniform across all regions of the country.
While cities like Mumbai, Delhi, and Bengaluru are expected to see strong growth, smaller Tier-II and Tier-III cities may experience more moderate growth due to lower demand and higher supply.
In conclusion, the residential real estate market in India is poised for a positive year in 2024-25, with sales expected to grow by 17% YoY.
However, the rate of housing price growth is expected to moderate to 3-4%, driven by factors such as excess supply, economic conditions, and interest rate trends.
The government's ongoing support and the continued urbanization trend are likely to sustain the market's momentum.
Frequently Asked Questions
What is the projected sales growth for the residential real estate market in 2024-25?
The residential real estate market is projected to see a sales growth of around 17% year-over-year (YoY) in the fiscal year 2024-25.
What is the expected rate of housing price growth for 2024-25?
The rate of housing price growth is expected to moderate to around 3-4% in the fiscal year 2024-25.
Which factors are driving the sales growth in the real estate market?
The sales growth is being driven by improving economic conditions, government initiatives like the Pradhan Mantri Awas Yojana (PMAY), and lower interest rates making home loans more affordable.
How is the oversupply of housing units affecting the market?
The oversupply of housing units, particularly in certain cities, has put downward pressure on prices, especially in the affordable and mid-segment categories.
What is the impact of urbanization on the real estate market?
The trend of urbanization is likely to drive demand for housing, particularly in the affordable and mid-segment categories, as more people move to cities for better job opportunities and living conditions.
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