Demand for two and three bedroom homes in India is increasing with aspirational real estate buyers returning to the residential property market, it is claimed.
More inquiries are being made about this type of property in the last three months, reversing the major shift away from larger real estate, says a new report from Jones Lang LaSalle Meghraj (JLLM).
The trend is spurring developers into reviving projects that were put on indefinite hold during the financial crisis. ‘The slowdown has brought about residential space affordability and availability in areas that were previously out of reach for middle-income buyers,’ says the research report.
‘Due to a reduction in pricing, residential property buyers now have a choice of attractive deals in preferred areas,’ explained Mohammed Aslam, head of Pune market for JLLM said.
The fact that lenders have brought down home loan interest rates to between 8 and 8.5% compared with 10 to 11% just six months ago is also encouraging buyers, JLLM says.
Lalit Kumar Jain, vice-president of the Confederation of Real Estate Associations of India (Credai) said members are also reporting that pent-up demand for properties has begun coming back to the market.
‘The feeling of uncertainty in buyers’ minds is reducing and stability is returning. We see demand picking up for property in this bracket. An increased feeling of job stability and the realisation that the prices have finally bottomed out are driving the buyers,’ he added.
All the demand though could result in price increases. According to the JLLM report developers are currently offering some discounts but there are signs of the first stirrings of price escalations. ‘Based on the fact that the demand revival is still in its infancy, this represents a worrisome scenario which seems to indicate that the slowdown did not deliver a sufficiently convincing message,’ Aslam said.
Demand for residential spaces is continued to remain high as so many projects were put on hold or cancelled and even if they are revived quickly it will still be some time before they come on stream.
‘Hopefully projects in this category which are on hold will roll and more will be planned leading to price stabilisation,’ added Aslam.