JAIPUR: Lower interest rates, pent-up demand and the need created by the pandemic are driving the recent spurt in demand for housing, but there are not many choices if you are looking for an apartment below Rs 50 lakh.
According to developers, property prices are getting expensive because of surge in raw material costs. Additionally, apartments in multistorey projects built on large land parcels are offering facilities like club houses, gyms, swimming pools, yoga and other facilities which add on to the cost.
Dhirendra Madan
, president Credai-Rajasthan (Confederation of Real Estate Developers’ Associations of India), said, “Through these facilities, developers are offering better living conditions and attracting buyers. More than that, the cost of construction has increased significantly over the past couple of years. They are the reason why a greater number of projects having apartments costing more than Rs 50 lakh are coming up.”
But others said with the rise in materials and construction costs, developers do not get a decent margin if they build apartments below Rs 50 lakh. “Developers are struggling to complete affordable housing projects because of the high raw material prices. It is an issue of margin that has set the trend for building projects where apartments are over Rs 50 lakh,” said the developer preferring anonymity.
With regard to the spurt in demand, the industry feels there are several reason why more and more buyers are coming to the market.
Anand Mishra
, vice-president, of
Credai
said, “The interest rates are very lucrative. One gets a home loan below 7%. Besides, there is lot of pent-up demand which remained idle during the two years of Covid pandemic. And thirdly, the prices are rising. People feel if they don’t take a decision, prices may go further up.”
The property market has been in a tailspin for the past 4-5 years. Madan said the rise in demand is a cyclical. “The housing market is in an upcycle. It has come off a slump of over 4-5 years. We see the uptrend to last longer,” added Madan.
But who are these buyers fueling the market? Builders are very careful if you ask them about the increase of investors in the market. While some said that only 20% of the demand is driven by the investors, others feel it could be more.
“Of course, the large number of buyers are end-users. But no one can stop if an investor wants to buy a property. There is a case for investors to get in now. Deposit rates are very low. Equity market and commodities are trading at peak levels. On the other hand, the property market which remained subdued for many years is now on a bounce. So, investors will enter. But it is hard to get a ratio between investors or end-users,” added Madan.
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