Housing.com’s IRIS index reached 109 points in March 2022, recording a sequential uptick from 99 points in the preceding month. The index has reached 83 per cent closer to the legendary peak of 131 points recorded in January 2022. The online property search volume has picked pace sequentially as the daily coronavirus cases in India have dropped to just 1,000 as compared to the peak of nearly 3 lakh cases during the third wave. This has led to further relaxations in curbs and lifting of mask mandates in several states, lending optimism to the home buyer sentiments. Mirroring the increase in online property search volume, the high-frequency indicators have also sustained momentum despite the third wave and ongoing geopolitical tensions, unlike the dip observed during the first and second waves of the COVID-19 pandemic.
For instance, the services and manufacturing activity remained in the expansion zone at 53.6 and 54.0, respectively, in March 2022. The Goods and Service Tax (GST) collections in March reached an all-time high of INR 1.42 lakh crore. The unemployment rate has eased to 7.6 per cent in March of this year compared to 8.1 per cent in February 2022. The lifting of restrictions on movement, buoyed by the sustained confidence in economic and income stability, has driven the consumers to return to the markets.
Corroborating with this positivity, home buyers have also expressed optimism for the economic scenario and their future earnings for H1 2022 in Housing.com’s latest consumer survey. The residential demand in India also presents a similar picture as sales recorded 13 per cent YoY growth in 2021, which continued in the first quarter of 2022, where demand registered a 7 per cent uptick from the same period in the preceding year. The growth in online high-intent homebuyer activity indicates that they have only intensified their searches, culminating in purchases in the upcoming quarters.
A deeper look into the search patterns for March 2022 shows that home buyers are looking for apartments with a 2 BHK followed by a 3 BHK, with the majority of such searches and queries being concentrated in the INR 50 lakh-1 crore price bracket in Tier 1 cities, and in less than INR 50 lakh in Tier-2 cities. Another notable trend that can be discerned is the uptick in searches for ready-to-move-in (RTMI) properties which grew by 40 per cent YoY in March 2022 as compared to a 30 per cent growth in queries for the under-construction property during the same period. Our consumer survey mirrors a similar trend where 57 per cent of the potential home buyers indicated that they are looking for RTMI properties for the coming quarter. The growing importance of home ownership amidst the pandemic and lingering trust deficit have pushed the interest of end-users for such RTMI properties over under construction, which will take the next 3-4 years to complete.
Bengaluru climbs back to the third spot after losing it to Hyderabad for two months
The IT capital of India, Bengaluru, climbed back to the 3rd spot on the IRIS index in March 2022 after losing it to Hyderabad for the preceding two months. Where Bengaluru gained its rank in March 2022, both its southern counterparts Hyderabad and Chennai recorded a dip of two and one point, respectively, in their positions on the index. The insights from our quarterly report ‘Real Insight (Residential) January-March 2022’ also show similar trends, where Bengaluru registered a marginal, albeit positive uptick in primary residential sales of 3 per cent YoY in Q1 2022, whereas Hyderabad and Chennai witnessed a degrowth of 15 per cent and 26 per cent, respectively, during the same period.
In Bengaluru, the majority of the home buyers are looking for apartments in locales such as Whitefield, JP Nagar and Nagarbhavi with 3BHK and 2BHK configurations in the INR 50 lakh-1 crore price range. Apart from apartments, our market analysis also suggests that residential plots have garnered a lot of stakeholder interest in the city, especially since the beginning of the pandemic, as many notable developers have entered the segment. Corroborating with this trend, the queries for plots have increased 1.6 times YoY in March 2022 in Bengaluru despite the marginal decrease in the overall online property search volume during the same period. Most of the searches for residential plots are concentrated in the micro-markets of RR Nagar and Nagarbhavi in the Southwest and Yeshwanthpur, Nelamangala and Devanahalli in the North in the less than INR 50 lakh price bracket.
Where Bengaluru climbed to the third spot, Ahmedabad, the state capital of Gujarat, jumped four positions amongst the Tier-1 cities and grabbed the 15th spot on the IRIS index. The majority of the home buyers in the city are looking for properties with 2BHK and 3BHK configurations in the less than INR 50 lakh price bracket. Most of these queries are concentrated in the localities of Chandkheda, Bopal, Nikol and Gota, situated along the outer ring road. Ahmedabad recorded an uptick of 18 per cent (YoY) in primary residential sales in Q1 2022, which, coupled with the improvement in rank position, signals a positive outlook for the city in the upcoming quarters.
Amongst major cities, Kolkata has not made it to the list of the top-20 cities with maximum high-intent property search volume. The homebuyer sentiments in the city have been marred due to the policy snags arising from the delayed adoption of the Real Estate (Regulation and Development) Act (RERA) post the West Bengal’s version known as the West Bengal Housing Industry Regulation Act (HIRA) was declared unconstitutional. The delays in project registrations and redressals have put the homebuyers in Kolkata in a wait-and-watch mode, thus hampering the growth momentum of online property search and queries.
Surat records the highest jump in rank amongst the top-20 cities with maximum online property search volume
Surat in Gujarat has recorded the highest jump of nine points (reaching the 4th spot) and has been trending amongst the top-5 cities with maximum online property searches in March 2022. The growth momentum in this renowned diamond processing and the trading centre has been fuelled by the slew of infrastructure development projects for improving the transport and liveability of the city, along with strong industrial and service sector growth, and the availability of robust international and regional connectivity. Also, Surat falls under the influence zone of Delhi Mumbai Industrial Corridor (DMIC), where the development of Surat Navsari Industrial Area, Hariza port, along with an integrated logistic hub, power point and an integrated township has been proposed for the area.
The rapid economic and infrastructure development coupled with rising employment opportunities have stoked the residential activity in Surat. While share-wise, the city is still catching up with its Tier-1 counterpart of Ahmedabad, it has been making strides in the sustained growth momentum of online property search volume and has emerged at the top amongst the smaller cities in India. Currently, the majority of the home buyers in Surat are looking for apartments and independent houses in the micro-markets such as Dindoli, Vesu, and Adajan, with 2BHK, followed by 3BHK configurations within the less than INR 50 lakh price bracket.
Amongst the Tier-2 cities, Indore has made it to the top-20 list of the IRIS index after two months. An educational hub home to prominent institutions such as the Indian Institute of Management (IIM) and the Indian Institute of Technology (IIT), Indore is one of the fastest-growing cities in the state of Madhya Pradesh. The city has made significant improvements in both physical and social infrastructure over the past few years. Indore has won accolades for being ranked as the cleanest city in India five times in a row under the Swachh Bharat Mission (SBM). Also, the development of prominent transport corridors such as Super Corridor Road and MR 10 road has attracted notable corporate giants such as Tata Consultancy Services (TCS) and Infosys to set up their businesses in the city.
The growth of the right economic drivers along with the supporting infrastructure in place has trickled down in the residential demand in the city, which is evident from the IRIS index. The majority of the queries for buying a home in Indore are concentrated in Rau, Vijay Nagar and Nipania, where home buyers are searching for apartments with 2BHK and 3BHK configurations in the less than INR 50 lakh price bracket.
Overall, the online property search volume has picked up pace as home buyers have resumed their searches as the third wave has ended, and the ongoing festive season has invigorated consumer sentiments. However, the current geopolitical tensions and the resultant inflationary pressures will have a significant bearing on the property prices, and hence the home-buying decisions for closing in on the purchases. Although the accommodative stance of the Central Bank to maintain the repo rate at 4 per cent will allow the major lenders to maintain historically low-interest rates will continue to act as a sentiment booster. We believe that the IRIS index will continue to pick up pace in the coming months as the mellowing of the pandemic and easing of curbs will keep on encouraging the home buyers to return to the markets.
