After influence peddling with a false narrative of ‘All is Well’ for so long the built environment of Indian real estate has finally conceded to the reality of headwinds. At the beginning of the yeart 2025 a section of stakeholders are accepting for the first time that declining home sales and high prices are going to hurt in the year ahead. However, they are yet to come to terms with their own faultlines. Track2Realty questions whether talking about the need to lower home loan interest rates and some concessions with the upcoming Union Budget is going to make any tangible difference.
The realisation itself is big. After all the hype and euphoria around mispalced optimism since the market revival post Covid, the stakeholders are now anticipating a modest single digit price rise in 2025. A price rise of 21% year-on-year during 2024 is not going to sustain its momentum in 2025. The double digit growth since Covid has actually led to a lopsided growth of Indian housing market. Every other developer, often with no track record or execution expertise with luxury, has been launching luxury and super luxury housing.
But a growing realisation that the market could only absorb this much is forcing the developers to evaluate their own cost & benefit analysis. And ideally they should have accepted the ground reality that it is time to get back to where the real demand is. But no! The misplced optimism still stands even at a time when it is writ large on the wall that luxury supply & absorption has reached to a plateau point.
For the records, new home sales across seven major cities declined for the first time since the pandemic. Sales volume declined 4% during 2024 to 4,59,650 units across seven major cities, while new supply fell 7% to 4,12,520 units. That was the first drop in sales after three straight years of higher sales growth following the Covid downturn. After a 47% decline in 2020, housing sales had grown by 71%, 54% and 31% in 2021, 2022 and 2023, respectively. Housing sales stood at 2,61,355 units in 2019 but plunged next year to 1,38,350 units due to the outbreak of the pandemic. Sales revived to 2,36,510 units in 2021 and then surged to 3,64,880 units in 2022 and 4,76,525 units in the 2023 calendar year.
But this sales growth to a large extent was due to a lower base effect, a fall in launches and stagnant market in the pre-pandemic era. It was nevertheless attributed to pentup demand and higher affordability by the industry stakeholders. And there lies the problem. A closer look at the boom & bust cycle of property market across the world suggests that misplaced optimism leading to more & more luxury launches and price elasticity leads to a prolonged spell of slowdown and bust. But the Indian developers continued to launch more and more luxury housing at the cost of affordable housing.
Now as the reality dawns, instead of taking corrective measures and talking about more supply of affordable housing, the new narrative is that the RBI will cut the repo rate this year, and enable banks to lower interest rates on home loans. They also hope for some fiscal incentives in the upcoming Union Budget to boost supply and demand for the affordable housing segment.
There is no denying that at the policy level too there is a need to redefine affordable housing, expand 80C benefits, and reduce interest rates. But is that enough to make this business of basic need – a house – more balanced. One can only hope that as the stakeholders have, even though reluctantly, accepted the reality of slower sales and higher prices in 2025, they will also accept their own falultlines and mistakes in market assessment. More importantly, they will correct the mistakes. Will they? My guess is as good as yours.
Ravi Sinha
@RaviTrack2Media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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