Housing sales-to-supply ratio rises to 1.36 amid limited launches in top 7 cities

Amidst the slew of structural changes, policy reforms and controlled launches, the absorption to supply ratio has improved from 0.69 in 2013 to 1.36 as of first half of 2020. The improvement in this critical ratio is indicative of sustained future growth for the housing sector, reveals the FICCI-ANAROCK report on Indian Housing Sector titled Disrupted, Transformed & Recovering.

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The report also highlights that in the post-pandemic era, affordability of mid-income homes, calculated on the ratio of home loan payment to income, will touch its lowest-best at 27 per cent in FY21. It was 53 per cent in FY12 and has been falling year-on-year ever since.

Several factors will influence residential real estate revival in post-COVID-19 times. For instance, property prices have remained range-bound with weighted average prices across the top seven cities rising only nominally at a compounded annual growth rate of 3 per cent between 2012 and 2019. This is significantly lower than the prevailing inflation rates and income growth.

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The developers are cognizant of the changing market conditions and have effectively controlled launches to not create an oversupply situation. "This adaptability and agility to respond as per the market conditions will go a long way for the sector's growth and stronger emergence in the years to come," the report said.

As policy reforms and financial stress continue to eliminate weaker players, listed developers' sales are staying on course in the current scenario. While overall sales have declined, listed developers continue to thrive on the back of homebuyers' increasing preference for organised players. ANAROCK research's consumer sentiment survey during lockdown also highlighted that 62 per cent of prospective buyers prefer to buy a home from branded developers, even if it comes at a higher cost.

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