How India’s residential market caters to all buyers from various income segments

Apart from the affordable housing segment, the aspiring middle class is also driving demand. 

According to a JLL article, India’s residential market has been at the centre of an up-down cycle for the past few years. Even before the pandemic, regulatory and liquidity issues hampered market recovery from 2017 to 2019. 

However, JLL says the bounce back happened fast, backed by resilient market fundamentals. The dynamics around home ownership, including the desire for bigger homes, affordability due to low-interest rates and attractive pricing, pushed the market to pick up. A more significant growth cycle was visible in the first half of 2022.

Here’s more from JLL:

Backed by favourable housing policies, the affordable segment (under INR 5 million) saw healthy sales, with more than one-third of the total units sold through 2017-H1 2022. 

However, in new launches, the share of the affordable segment dropped from 42% in 2017 to 20% in H1 2022, mainly due to the high unsold inventory. As many such projects are in city peripheries, developers were cautious about proceeding with their launch.

The price segment of INR 5-10 million and INR 10-20 million has grown into a major category regarding preferences across all the major cities over the last few years. Both these segments have seen a combined share increase of 74% in H1 2022 from 51% in 2017. 

The upswing stemmed from improving income levels across the country and the aspiration for bigger homes and improved lifestyles. With a combined share of 49% in 2017, increasing to 63% in H1 2022, these segments have contributed 56% of all units sold across major cities in the last six years.

The higher-priced segment (above INR 20 million) has been a marginal participant in the overall sales and launch activity across the Indian residential market.  Its share in both launches and sales remained in the range of 5-6% over the last six years. However, new launches have picked up momentum post-COVID, with rising sales, largely due to buyers looking to upgrade their existing homes with bigger configurations and better amenities.

India’s residential market has come of age, creating a value offering for all buyer and income segments. While affordable housing is still the ask for most Indians, the aspiring middle class is the driving force behind the demand for home upgrades. 

Developers who have optimally curated the value proposition of location, size, amenities and pricing are pleasantly surprised by the response to higher ticket-sized projects. The market is poised for the growth momentum to continue even as the rising interest rate cycle is yet to show its full effect.