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Credit rating agency ICRA in its latest report has revised the outlook for residential real estate for the current fiscal (FY23) to stable from negative on an improved demand. The revision in the outlook has been supported by multi-year high sales which in turn are driven by increasing preference for home ownership, improved affordability, all-time-low home loan interest rate, among other factors. Housing sales in top seven cities are expected to grow by 3 per cent this fiscal.

According to the report, the sharp recovery in demand in the aftermath of Covid has improved pricing flexibility, particularly in completed projects. In FY23 as well, it said the prices are expected to rise, depending on the project specific sales traction, to compensate for the rise in construction cost seen in recent quarters. Healthy demand prospects and pricing flexibility in completed projects can help developers to maintain profitability margins.

The report further said the demand is expected to remain firm even if there is an increase in interest rate on home loans by 50-75 bps from current levels. New launches are expected to be ramped up significantly, supported by reduced unsold inventory levels and steady demand. It expects launches to be around 400 million square feet in FY23, which is 21 per cent higher than the estimated launches of 330 million square feet in FY22. It added that the larger and reputed builders with better delivery track record continue to gain market share while the weaker players are yet to fully recover.