The last few years were nothing different from a roller coaster ride for the real estate industry. The real estate market faced substantial loss during the COVID-19 spread with the housing market experiencing a significant low in the last two years. However, in 2022, things seem a little brighter for the real estate market as it is likely going to get a huge boost in property demand and sales.
Despite the fears of COVID-19 new variants, the demand for the housing market in 2022 is increasing among homebuyers. The property market is predicted to offer an affordable housing segment to buyers this year wherein all will be able to afford and purchase their own properties.
In this article, let’s see how the real estate market will grow and evolve in 2022 and beyond.
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Home Buying Trends in 2021
The trends in the housing market last year were always in flux. The impact of changes in the market after the pandemic have been significant. However, in 2021, the real estate market started getting back on its foot again. The trends of the real estate market in 2021 included the following:
- Apartments were back in demand and a surge in the prices in the big cities of India were witnessed during the second half of 2021.
- Home loan and property market interest rates declined around the same time.
- Ready-to-move-in properties attracted more buyers than usual.
- States lowered stamp duty rates on the properties.
- Value appreciation was seen in Tier 2 as well as Tier 3 cities in India.
- Small players and property dealers had a hard time staying in the market.
- The housing sector remained the most in-demand sector.
Most of the trends of 2021 are likely to continue in the 2022 housing market graph. Additionally, there will be more new trends, such as experiential retail, RSH market growth and more.
Preferred Residential Spaces in 2022
The year 2022 is predicted to be the year of homebuyers. The housing market this year will continue to witness a steady demand. Numerous builders offering unique projects will give both the investors and the end-buyers ample property choices. The housing segment will see increased sales as compared to industrial properties.
In 2021, the residential properties recovered moderately from the effects of the pandemic. Around 5% capital value growth is expected in residential space by 2022. The sector has already seen a green flag and is ready to gain momentum this year. Low rates of interest and incentives offered to property developers by the Reserve Bank of India (RBI) have given a boost to the residential sector.
More than 77,000 residential units were sold in the three quarters of 2021. The sales were 47% more than that of the previous year. In 2022, the average quarterly residential sales are predicted to be 35,926 units. The housing market graph will grow depending upon the home buyers’ needs and expectations.
What Will the Union Budget 2022-23 Bring for the Housing Market?
The Union Budget 2022-23 was announced by Finance Minister Nirmala Sitharaman on February 1, 2022. The budget brought to its forefront ‘One Nation, One Registration Software’ to shift home sellers and buyers to taking more intelligent real estate market-related decisions.
The initiative of Union Budget 2022-23 regarding the Indian real estate market are as follows:
- Finance minister Nirmala Sitharaman announced to apportion ₹48,000 crores between all the Indian states for the construction of 80 lakhs residential units under the Pradhan Mantri Awas Yojana (PMAY).
- The finance minister also urged the states to adopt the Unique Identification Number for Land Parcels for the efficient use of available land resources in the country. This number will help in the IT-based management of records.
- The affordable housing market will be the driving force in the real estate market for the next decade.
- As per the housing market predictions, the real estate market is expected to contribute $500 billion a year(12% to 13% of the GDP).
- Proptechs or online real estate businesses, such as Square Yards, will play a major role in the growth of the housing market.
Key Factors That Would Define The Property Market in 2022
The real estate market is most likely to be back on its track in 2022. Below-mentioned are the key factors that will define the housing market in 2022 to bring back the rhythm and earn profits.
Prices May Go North in the Second Half of 2022
In the last two years, there were merely any fluctuations in the housing market. But in the second half of 2022, prices in the real estate market are most likely to go north, indicating a rise in property prices. This price bounce in the market will be back with the surge in home buyers’ demands. The expected growth of the Indian economy by 8-9% in 2022 also might fuel this fire leading to not only an increased property demand in major cities of India but also influencing price hike further.
Due to the pandemic demand for properties in the real estate market suffered a significant lag. This pent up demand for properties is estimated to finally unleash itself in 2022, bringing back the good cheer in the real estate market. And even though property prices may soar during this time, low home loan interest rates will ease home buying and further boost the industry to flourish again.
Residential Property Will Get Strong Footing
During the pandemic, the rented residents faced more problems than anyone else. Though the pandemic was there, there was merely any relief in rent prices. This increased the demand for residential properties in the country. More homebuyers who live in rented houses are on the line to buy their residential property.
Due to this upsurge in demand, residential property prices might increase in 2022 after its fall and subsequent stabilisation in the past two years. The housing market predictions indicate that about 5% of market capital growth value will be seen in residential properties in 2022. The demand for residential spaces will remain in the market for a long time. Trusted builders and developers are going to get good sales profits from affordable residential properties. The need for residential space will dominate the housing market in 2022.
RSH Market Will Reach a New High
The RSH markets like Shimla, Ooty, Alibaug, etc. have seen a huge shift in demand in the last two years as both the real estate and hospitality needs are increasing in this sector. Currently, the RSH market is valued at $1.3 billion USD and is expected to reach $4 billion by the end of 2022.
With the work from anywhere culture gaining momentum, the demand for a second home in these RSH markets will also likely soar. The demand is going to increase in 2022 and in the years to come. This will lead to an increased housing market graph after its subsequent stagnation in the past two years.
Substantial Community-led Lifestyle Will be the New Standard
COVID-19 taught us that hygiene and safety are as important as living in a sustainable and community-led lifestyle as it offers an equal give and take of responsibility, safety, commitment and acceptance. The need for such communities has, therefore pushed builders to focus on establishing a substantial community-led property market.
The promotion of a socially engaging life with safety is becoming the USP of a number of new properties vouching for the potential to attract more buyers and investors further propagating the rhythm of the housing market 2022.
How Will FDI Drive the Real Estate Market in 2022?
Foreign Direct Investment or FDI still remains one of the major contributing factors to the growth of the housing market graph in India. Attracting more foreign investors in the Indian real estate market, the sector has improved its performance over the last few months. Additionally, it is quite surprising that the residential sector has especially been gaining foreign investments in the last few months.
Ease in investment protocols and improved transparency in the real estate sector has led to higher investments in residential spaces. More NRIs and individuals with an ultra-high net worth (UHNIs) have started investing in the property market in the country for lucrative benefits.
With the establishment of RERA, the transparency in the real estate market has increased over time. Cent percent FDI usage in the construction of properties have further augmented investment opportunities from NRIs.
As per many reports, APAC nations, including India, are a remunerative foreign investment option right now.
Bottomline
The housing market will be a key player in the real estate market in 2022. The residential space will keep dominating the housing market and will bring in foreign investments. The housing market is also expected to gain more shares in the year 2022. The demand for bigger residential spaces and low-interest rates are the stimulants for attracting buyers and investors, despite a rising trend of prices. If there are no disruptions and the current momentum continues, the housing market graph will almost achieve its original state in the pre-COVID era.
