The government has brought a new culture of accountability and transparency through regulatory mechanisms such as Demonetisation, the Real Estate (Regulation and Development) Act, 2016 (RERA), and Goods and Services Tax (GST). The seamless implementation of the above key policy reforms has helped to infuse the confidence of the home-buyer into the sector.
The government’s Pradhan Mantri Awas Yojana or the Housing for All scheme by 2022 and the granting of infrastructure status to the affordable housing sector have also been aimed to provide better options for home buyers allowing them to purchase their first homes. While these initiatives have attracted homebuyers to the affordable segment, they have also fuelled the enthusiasm of the realty developers to take up more affordable housing projects.
Housing sales rose 6% in 2018 in top eight cities as real estate developers lowered the prices of the properties and offered indirect discounts to attract buyers. However, the sale of housing units increased in six major cities — Delhi-NCR, Mumbai, Ahmedabad, Chennai, Bengaluru, and Hyderabad; but declined in two cities —Pune and Kolkata.
With regulatory and government support such as lower GST rates and infrastructure status to affordable housing have fuelled the demand for affordable and mid-range housing. The number of new residential units launched were 75% higher in 2018 compared to last year, with 182,207 units being added to the real estate market.
Mumbai accounted the highest residential unit launches (38,390 units) in 2018, followed by Pune with 18,580 units and Bengaluru 11,830 units. Seamless implementation of RERA in both Mumbai and Pune and the construction ban due to dumping ground issue in Mumbai fuelled the growth in new launches in both cities of Maharashtra.
The number of total unsold residential inventory levels have improved at the end of 2018 and are estimated to be at 4,68,372 units, which were lower by 11% as compared to the end of 2017 and close to 30% lower than at the end of 2016.
Affordable Housing: Preferred Segment
60 percent of all launches were priced within the `50 lakh bracket’, proving that a large number of developers have shifted their focus on the affordable and mid-segment because buyers preference is moving towards the affordable segment. Most developers are making their way into affordable housing segment and are finding this segment lucrative.
Overall, the last year had been the revival year for the Indian real estate market. There has been an improvement in the demand of affordable housing and has shown the interest of the real estate giants on the completion of residential projects since the implementation of RERA and the subsidies under PMAY (Pradhan Mantri Awas Yojana). Transparency and accountability in this sector have improved too with the strong implementation of RERA and GST and has played an important role in restoring faith in the realty market.