Ms. Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice, President of NAREDCO- Maharashtra
Rising earnings and an expanding population are driving a boom in property demand in the Mumbai Metropolitan Region (MMR), which is home to over 23 million people. Amongst other places, Chandivali, Powai and Bandra are the current hotspots. In the first half of 2023, home sales in the MMR region increased by 25% compared to the same time in 2018, according to a newly published research. The research also notes a 10% increase in the MMR region’s average home price over the previous 12 months.
India’s GDP is primarily produced in urban regions. According to a McKinsey & Company analysis, cities might contribute up to 70% of India’s GDP by 2030 and improve per capita incomes nationwide. People in cities now have higher disposable income due to this doubling of revenue. They now have more money to spend on housing. Since purchasing a home is costly, an increase in income typically causes a greater demand for housing.
Housing sales increased when the lockdown was lifted, while they had declined during the pandemic. Since 2020, there has been an exponential rise in sales and also housing product releases. In certain situations, city residential sales have now improved to pre-pandemic levels. Home purchasers are eager to relocate into larger homes in metro areas due to the pervasiveness of the work-from-home culture. Buyers are switching from two bedrooms to three to meet their expanding needs. These buyers show a marked preference for ready-to-move-in homes rather than under-construction ones. There are two reasons for this. One, there is an urgency among buyers to upgrade their homes and secondly, ready-to-move-in properties offer buyers a sense of security that they will get the house they have paid for. The quick recovery in home sales after the pandemic is largely because of increased demand for ready-to-move-in properties. This is true of tier two and three cities as well, where demand for homes is soaring.
Unexpected increases in housing demand do also result in a few problems. Increasing the housing supply in cities will be important to fulfil the demands of various urban household types and income levels. Numerous issues arise if there is not a sufficient supply of urban housing to meet demand. The biggest was a sharp increase in real estate prices that occurred far more quickly than wage growth. This can cause problems with affordability, particularly for first-time homebuyers who need help saving money for a down payment.
The wealthy are not the only people who live in cities. All income levels have a desire for homes. In urban regions, there is now a need for more than ten million units. Twenty-five million affordable housing units are expected to be required by 2030. Real estate will only continue to rise if real estate considerably accelerates the pace of home construction. If housing costs rise too high, it can affect people’s ability to buy a home. More house construction can help keep housing costs fair.
The MMR region’s soaring property demand is good news for the real estate industry. The price of real estate is rising as a result, though. Due to this, it is challenging for low- and middle-income families to afford homes in the area. To address the issue of affordability, the government is taking action. For instance, the government has started the Pradhan Mantri Awas Yojana (PMAY), a program to offer everyone access to inexpensive housing. In order to build affordable housing, the government is also giving developers incentives. Despite these obstacles, it is anticipated that the MMR region’s real estate market will continue to grow in the years to come.
More people are able to qualify for mortgages and make the down payment on a property when salaries grow. First-time homebuyers, in particular, should have this in mind. People may desire to upgrade to a bigger home or a home in a more attractive area as their salaries rise. Mumbai is a rapidly expanding city with a finite amount of available land, which is increasing demand for homes in the suburbs and in places with adequate amenities and infrastructure. Due to all of this, real estate is a wise investment. Real estate is also a popular investment because many people believe that prices will continue to rise in the future.
The demand for properties is expected to remain high due to the region’s robust economic growth and the government’s emphasis on infrastructural development. In the MMR, a lot of individuals are now purchasing second houses. These residences are frequently used as vacation or weekend houses. As people’s salaries rise and they have more money to spend on leisure activities, the demand for second houses is growing too. In general, the real estate market is benefiting from the rise in income in the MMR. The demand for real estate is rising across all market sectors, including second homes, luxury houses and townhouse developments. Many people acquire homes as investments to sell them for a profit later.
