The real estate market in the top cities of India has experienced slow growth in the last few years. However, the demand for affordable homes in small cities has been increasing. The housing for all missions of the government, along with its push for an affordable home, has been driving the property sales in the smaller cities. In the last five years, statistics show that homeowners are increasingly buying these properties in suburban areas and small towns.
At the end of 2018-19, the sale of real estate in as many as 20 tier-II cities has increased by 16%, as compared to the figures five years ago. These cities include Nagpur, Vadodara, Jaipur, and Nashik.
This share of Tier-II cities, by the end of 2019-20’s September quarter, had increased further to 26%. The overall sales of homes, in the same quarter in the country, had fallen by 2%. Major cities that witnessed a decline in the sale of real estate include Chennai, Mumbai, Delhi-NCR (National Capital Region), Hyderabad, Chennai, and Pune. In these cities, the property market has gone through a rough patch, where the sales of properties stand at 91,115 units.
Comparing the sales figures to 2014, the sales figures for properties in tier II cities have grown by 112%. However, the sales figures in the tier I cities stand at 28%. This indicates that people in smaller cities are more inclined to
residential property in Mumbai. It is interesting to note that the sale of properties in the smaller cities is on an increasing note. Besides, people are more interested in buying affordable homes.
The government has also taken certain measures, that would foster a better growth of the
real estate sector in Mumbai. Particularly, the PMAY (Pradhan Mantri Awas Yojana) has strengthened the affordable housing sector significantly. In smaller cities, the lands are more conducive to develop homes at a low cost. Since buyers can enjoy the benefits of PMAY, they can afford these properties.
In the September quarter, the value of homes in most of the cities declined to a certain extent. However, cities like Nashik, Jaipur, and Ahmadabad witnessed a surge in sales, by 25%, 22%, and 4%, respectively. Experts reveal that in the smaller cities, the land is available at cheaper rates. Therefore, the project costs are comparatively lower, and the developers can reduce the overall capital by around 25% to 30%.
In the smaller cities, homeowners can now buy mega
affordable projects, which are now available under INR 10 lakhs. The local developers are coming up with these projects. The real estate market in these cities is growing rapidly, due to the
housing policy of the government and the lower prices of land.
The developers, in the last five years, have been able to build several affordable projects in the smaller cities. However, the demand in these towns is not as high as in the MMR or NCR. It would take another few years for the demand for real estate in the smaller cities to reach this scale.
Presently, a large number of developers are focusing on affordable homes in tier I and II cities. It would be wise for investors to buy their properties now, as properties are likely to become more expensive in the coming years.
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