Housing Prices to Increase 1.3-1.4 Times in Coming Years
A fresh study indicates firming up of housing prices in the near future and major players dominating the market long-term.
After more than half a decade of decline and consequent bottoming out, the realty sector is about to witness increased prices according to Money Control which cited a study by Motilal Oswal.
With inventories being cleared up and new projects barely keeping up with increased demand, a supply crunch is likely to push prices up. The next four to five years will see prices go up 1.3-1.4 times the current levels, or 4-5 % on a CAGR basis. Going by the study, a mid-segment apartment costing Rs 50 lakh at current prices in Dombivli East is expected to hit valuations in the range of Rs 55-60 lakh within the next 4-5 years.
According to Money Control, the key takeaway from the study is that the residential sector is finally experiencing a revival in demand after a lengthy period of sluggishness, and importantly, the momentum is expected to last. This, after prices hit rock bottom and will pick up in the near term as demand will exceed supply at current rates. The housing sector already witnessed a peak in new sales during the festive season on the back of increased demand over the last months. This demand has already absorbed a large part of the completed and near-complete inventory. Post-COVID recovery, increased IT hiring and salary revisions are some of the factors driving this demand.
The study also expects a consolidation in the industry. Supply through the next 6-12 months will continue to be restricted to large listed and private players who are also expected to dominate expansions, while smaller players will consolidate. It is expected that 20-25 players are likely to dominate the market in the long term against the current number of 400-500.
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