Housing Demand To Remain Strong On Demographic Dividend, Other Positive Factors: HDFC Capital
Listing out the demand drivers, Roongta said there is an aspiration for home ownership.
Housing demand in India will remain strong in the coming years as demographic dividend and relatively buyers' less reliance on home loans will sustain the momentum despite higher interest rates, HDFC Capital Managing Director Vipul Roongta said on Friday.
He also noted that one out of three homes is being purchased without home loans.
Roongta said India's housing market is witnessing strong demand despite the hardening of the interest rates on home loans in the last six months.
Since May this year, the RBI has increased the repo rate by 190 basis points to contain inflation. As a result, the interest rates on home loans have gone up from around 6.5% to over 8% now.
"I feel that across asset classes, not only middle-income and low-income housing, but even with premium and ultra-premium, there is going to be a tremendous play that is going to be there, basically fuelled by four-five factors," he said at a CII conference on real estate.
Listing out the demand drivers, Roongta said there is an aspiration for home ownership.
"The average homeownership age in India is 37 years and two third of India is still below the age of 35...So very obviously, there is going to be a serious demand," he said and asked builders to take advantage of the demographic dividend.
Roongta mentioned that the outstanding mortgages in India are about $300 billion, which is 11% of India's GDP.
In India, he said, people do not decide to buy a house just because the interest rate goes down by 2%t and opt not to purchase if the interest rate goes up by 2%.
"On average, the loan-to-value ratio that exists in residential mortgages does not exceed 68 per cent. That means 30-32% is coming as own contribution... one out of three homes don't take mortgages. So, there is a fair bit of non-reliance on the banking ecosystem," Roongta observed.
DLF MD (Rental business) Sriram Khattar said Indian real estate has shown great resilience during the Covid pandemic. The demand for premium quality office space has risen significantly, especially from global corporates.
Khattar said the company is focusing a lot on sustainable development.
According to property consultant Anarock, the housing sales across seven cities between January-September period surged 87% to 2,72,709 units and had breached the transactions clocked in the entire 2019 pre-Covid year on strong demand.
Housing sales stood at 2,61,358 units sold during the 2019 calendar year. However, housing sales took a hit during Covid-19-induced lockdowns and stood at 1,38,344 units in 2020. Last year, housing sales revived to 2,36,516 units.