US Subprime crisis fails to crack Indian realty boom
December 3, 2007
Did anyone say housing slowdown? Well, even though United States’ housing-led sub-prime (credit) crisis has spooked markets and economies, globally, for sometime now, and it may be fashionable, though entirely appropriate, to talk-down soaring house prices across most of India’s big cities, the prognosis for housing demand in the country, here to 2015, remains rosy.
There will be demand for over 24.3-million new dwellings for self-living in urban India, and over half of this will come from outside top 100 cities, according to ‘Housing Skyline of India 2007-08’, a study by Delhi-based research firm, Indicus Analytics.
Delhi will be the biggest generator of demand for residential housing in the country, followed by Mumbai and Thane. The national capital will see an extra demand of 6.97 lakh dwelling units in the next 8 years, up to 2015, the highest anywhere in the country. Mumbai with an extra demand of 5.86 lakh units of housing for self living and Thane (3.7 lakh) will be the next two residential property markets. Urban areas of North 24 Parganas, Pune, Ahmedabad, Bangalore, Jaipur Chennai and Kolkata are the expected to make up the top 10 residential property markets during the period.
While easier credit availability is likely to drive greater ownership in future––home loans owners will go up from 4-million currently to 10-million odd by 2015––changing family structure in urban India will be fundamental driver for housing growth. According to the Indicus Analytics study, the number of nuclear families grew from 37.01-million 1999-00 to 44.20-million in 2004-05 in urban India.
Today, nuclear families (couple with/out children) account for as high as 67% of the total 66,782,719 urban households with extended families (parents with one married child with/out children) accounting for 29% and joint families comprise 4 % of all urban households in the country. Surprisingly, traditional Chennai has the highest proportion of nuclear households (74 %) and Mumbai & Ahmedabad has the highest proportion of extended households (36%) amongst the top ten cities on housing demand 2007-15.
The trend of nuclearisation is likely to accelerate, therefore, there’s a strong likelihood of higher demand for smaller houses in future, the study says. Also, the bulk of the urban housing demand will henceon come in from lower-middle to middle-middle class (annual household income between Rs 75,000 to Rs 500,000) and super rich households (annual income over Rs 10-lakh).