Housing.com’s IRIS index stood at 97 points in April 2022, registering a slight downtick from 109 points in the previous month. India’s online property search volume is showing signs of easing amidst the rising property prices on the back of an increase in key materials, such as steel and cement, which have pushed the construction costs significantly. Corroborating with this, the consumer price index (CPI) inflation has reached an 8-year high of 7.8 per cent, well above the RBI’s target band of 2-6%. The property prices have also surged at a pace of 7 per cent YoY in Q1 2022 since 2014, according to our quarterly report ‘Real Insight Residential – January-March 2022’. The hike in property prices and waning discount schemes have impacted the homebuyer sentiments, who have slowed down their online property search momentum.
Where rising inflation continues to rile up the markets across sectors, including real estate, some of the leading indicators exhibit positive cues. For instance, services PMI accelerated to a 5-month high and reached 57.3 in April 2022, while manufacturing PMI rose to 54.7 per cent during the same period. The unemployment rate is at 7.8 per cent, lower than the high of 8.1 per cent recorded in February 2022. The Reserve Bank of India’s (RBI) Consumer Confidence Index for the current situation and future expectations have moved up to 71.7 and 115.2 points, respectively, the highest since the beginning of the COVID-19 pandemic in 2020, suggesting a positive consumer outlook for the economy and income. The GST collections have also scaled to a record high in April as economic activities continue to pick up. Although the high-frequency indicators and inflation paint a mixed picture, the online high-intent property search activity remains well above the bottomed-out levels during the second wave of the COVID-19 pandemic.
The trends for April 2022 suggest that homebuyers are looking for a property with a 2BHK followed by a 3BHK configuration, with the majority of such searches and queries being concentrated in the INR 50 lakh-1 crore price bracket in Tier 1 cities and less than INR 50 lakh in Tier 2 cities. The share of homebuyers (53 per cent) looking for ready-to-move-in properties is higher compared to those looking for under-construction properties. The pandemic-induced importance of homeownership and the need for safety and security have pushed first-time buyers and end-users to look for ready-to-move-in properties.
Delhi NCR continues to hold the first spot on the IRIS index for the third consecutive month
Delhi NCR maintained its first spot on the IRIS index in April 2022 for the third month straight after losing it to Mumbai in January of this year. The majority of the searches in the agglomeration were concentrated in Gurugram, followed by Noida. In both these cities, approximately 40 per cent of the homebuyers are looking for properties with a 3BHK configuration in less than INR 50 lakh price bracket. In Noida, the share of buyers looking for properties in the INR 1-2 crore has increased to 20 per cent in April 2022 as compared to the same period the previous year. The majority of searches for buying a home in Gurugram are concentrated in Sector 105, Sector 57, and Sector 67. In the case of Noida, homebuyers are looking for properties in Sector 150, Sector 37, and Sector 49.
While Delhi NCR takes the top spot on the IRIS index, which is a leading indicator of upcoming residential demand, the region has been witnessing a constant decline in supply, especially post the implementation of the Real Estate (Regulation and Development) Act (RERA) in 2017. The dwindling new supply and high age of inventory have created a gap between the homebuyer preferences and available products in the market.
Amongst the top eight cities, Ahmedabad reached the 10th rank by registering the sharpest uptick of 5 points in its position on the list of the top 20 cities with maximum high intent homebuyer activity. In terms of primary residential demand as well, the city recorded an uptick of 18 per cent in the January-March 2022 quarter compared to the year-ago period. The majority of the homebuyers in the city are searching for apartments with a 2BHK configuration in less than INR 50 lakh price bracket in locales such as Bopal, Chandkheda, and Gota.
Ahmedabad and Lucknow record the highest jump in position amongst the top 20 cities with maximum online property search volume
In the case of Tier 2 cities, Lucknow, the capital of the state of Uttar Pradesh, recorded the highest jump of 5 points in its position on the IRIS index, reaching the 12th position in April 2022. The city has witnessed strong commercial growth over the past years, underpinned by infrastructure development under Smart City Mission and a focus on regional and international connectivity. This has also trickled down in the residential real estate demand, which has been picking up in the city over the past few years. According to Housing Research, maximum homebuyers in Lucknow are looking for properties with a 3BHK configuration in less than INR 50 lakh and INR 50 lakh-1 crore price bracket. The micro-markets such as Gomati Nagar, Oxame City, Golf City, and Indira Nagar are being searched for buying a home in the city.
Overall, the online property search volume has eased as the ongoing geopolitical tensions have had a bearing on the homebuyer sentiments. In the coming months, too, the rise in property prices owing to inflationary pressures and the recent hike in repo rate from 4 per cent to 4.4 per cent will to an extent, overshadow consumer sentiments. While the current situation will impact the IRIS index further, we believe it will continue to remain well above the levels witnessed during the second wave of the COVID-19 pandemic in the second quarter of 2021.
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Renuka Kulkarni, a seasoned real estate professional, brings over five years of diverse experience in research, consulting, and architectural design within the urban sector. Her expertise spans public and private projects, showcasing proficiency in real estate research, trend interpretation, and policy analysis. With qualifications in architecture and a master’s degree in Data Science (Business Intelligence & Data Analytics) from IIIT Bengaluru, along with an M. Tech in Urban Development and Management from TERI School of Advanced Studies, New Delhi, Renuka seamlessly blends data analytics with market insights, offering a holistic understanding of the industry in her research pieces.