Major policy overhauls, amendments in old Acts, the decisive impetus to infrastructure development, arguably Utopian 100 Smart Cities and Housing for All by 2022- one thing is definitely unarguable – the Modi government has set the ball rolling for residential real estate to flourish in the long-term.
The measures taken might have short-term impacts but are going to have a positive impact in the long run. Having said that, some experts still believe that though the measures are good, the on-ground implementation for most of these initiatives is far from what could have been achieved even in these five years.
While the last couple of years did see some movement in the sluggish residential market, the scenario is still not very uplifting. Let us have a look at how residential real estate performed under Modi government:
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Sale and Supply:
Due to RERA and other related factors, developers are adopting a more cautious approach. The top 7 cities saw the supply of new housing units reduce by 64% in the last five years – from 5.45 lakh units in 2014 to 1.95 lakh units in 2018.
Similarly, housing sales were also slow, dropping by 28% during the same period – from 3.43 lakh units in 2014 to 2.48 units last year.
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Rise Of Affordable Housing:
Following the government’s push towards affordable housing, affordable housing has grabbed the attention of even the leading developers of the country like never before Anuj Puri wrote at Newsbarons. As per Anarock data, the share of new affordable housing supply (homes priced below INR 40 lakh) has been increased from 2015 onwards to such an extent that it now dominates the supply in the housing market.
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Compact Homes:
Due to the impetus given to affordable homes, the average size of the new houses is shrinking. The average property sizes in the top 7 cities shrunk by 17% in 5 years. Compact homes are selling like hot cakes and developers are not shying away from offering such homes.
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Price Correction:
The average prices across the top 7 cities have seen a meager 7% increase in the 5 years. Considering inflation (assuming 7% a year) all cities are seeing a somewhat negative price trend in the last 5 years.