Realty Heading Into The Best Of Times, Or Is It?

Opposing views on the current state of Indian realty and housing
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While reading through major recent reports on housing and realty - which are all brimming with positivity and signs of big time resurgence - we found a questioning voice with reasonable substance and realised that we must bring it to your notice. 

Alright, Fire Away

👍 In a recent press release, HDFC Chairman Deepak Parekh expressed that in his 50-plus years of work life, he had not seen better housing affordability in the country than now. 

He went on to elaborate that today's concoction of easy liquidity conditions, record low interest rates, and a “burning desire” to be a homeowner has never been brewed before.

The Flip Side

However, another perspective on the current state of affairs reduces all the sector's positivity to a mere sales pitch. 

👎 It argues that in a market where the on-ground reality is job losses and salary cuts, a market where an average Indian is reeling under hyper-inflation, homebuyers are unmoved by reports of the real estate market beating all sales records. 

This you cannot disagree with - most trending surveys today claim that consumer sentiment is at an all-time high following two waves of COVID-19. 

In India, a home is an aspirational product, so much so that ask any Indian and the reply would be that she needs a house. However, the true ask here is not to aspire for a home but to be able to afford one - a difference of night and day. 

The Best of Times Has Begun

Deepak Parekh stresses that India is fortunate not to have a housing bubble and that the inherent demand for housing remains immense, leading to efforts to ensure right-priced housing supply to meet the needs of all income groups.

Also, sales aside, new project launches can be seen as “the greatest mark of confidence for the future”.

Or Has It?

The other side clarifies that most reports today are about real estate sales patterns in the Top 10 cities only, which does not reflect the truth. Also, comparing Q3, 2021 sales to pandemic hit Q3, 2020 to declare 80-90% recovery or 60% growth makes no logical sense. 

It emphasises that in a country where income to property prices are highly skewed, the majority of homebuyers fall under the top 10% of the demographic profile and this is the segment that is under the most amount of pressure post Covid-19, due to job losses and salary cuts. 

Demand, thus, is only notional. 

Ravi Sinha points out that since the lifecycle of an average real estate project is at least five years, sales benchmarking should also use the same time frame. 

The sales statistics will remain biased unless it is collated on the scale of average sales in the last five years. 

🎙 - "But then real estate reports conceal more than they reveal."
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