Year End Housing Sector Review: 2103 and Outlook 2014

Yesterday we came out with the piece of news that prices of housing has fallen down by 1.7% in January-June 2013 period and what could be the reasons behind it. This time, we are trying to deep dive see few more things, which has impacted the housing sector which contributes more than 5% of total employment of the country. I am not talking here about real estate sector, whose contribution in employment may be even more.  

India’s GDP Growth in Q2, 2013-14: 4.8% (

Industrial Production Index in October: -1.8%(

Inflation at Consumer Price Index: 11.060% (

Does above figures sound alarm bell in your mind; probably yes. Unemployment rate has gone up, inflation at consumer price index has gown up, GDP, though has been better than first quarter of this financial year, but far less than what it was last year, industrial production has nose dived.

That’s why we saw decrease in prices of housing in January-June 2013. But with all these figures, one thing is also true that we are surviving and we are growing; in fact real estate sector growth rate in Q2 of 2013 was at 10%. 

If we have to make an assessment of the outlook of 2014, we will give following points to ponder:

1) Affordable housing will be flavor of 2014. According to a report published in, as of date, shortage of housing units stands at 19 million and 95% out of that are in Economically Weaker Section and Low Income Group. In India, housing for EWS is defined by the Technical Group on Estimation of Housing Shortage as having a carpet area of 21-27 square meters; LIG housing includes units of 28-60 square meter carpet area. By the government’s definition, EWS housing falls in the range of INR 4-10 lakh. This means that development of affordable housing will have to penetrate into the deeper suburbs of our cities, where such price points are feasible. (

2) Due to impending parliamentary elections in April 2014, any commercial property decision will wait till the new government is formed.

3) According to reports, Delhi-NCR, Mumbai and other Tier-I market except Bengaluru is having very high inventory level. In fact, Delhi-NCR and Mumbai is having inventory level as high as of 41 months ( This will have a serious impact on the prices, because with slowing economy, growing inflation and impending election, major capital expenditure will definitely wait. If will remain a question whether real estate developers in these two tier-I market are having so much cash to afford the high prices.    

We will see how this market responds to the challenges posed by micro and macro economic factors. 


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