India's real estate market is booming, with a 33% year-on-year growth in sales of 4.1 lakh units across the top eight cities in 2023. However, the sector faces challenges with 4.1 lakh stalled dwelling units valued at INR 4.1 lakh crore. Government initiatives like PMAY-U and policy reforms have boosted demand, with new housing supply hitting a record 5.2 lakh units in 2023. Despite this, stalled projects remain a significant issue, prompting calls for solutions like mandatory RERA registration and exploring financing options to revive these projects and sustain the market's momentum.
India's real estate market is experiencing a welcome rise, driven by rapid urbanisation and a growing demand for housing. However, a significant number of stalled projects, estimated at 4.1 lakh stressed dwelling units with a value of INR 4.1 lakh crore, continue to cast a shadow on this positive outlook.
The Economic Survey paints a picture of a thriving housing sector. With nearly half of India's population projected to live in cities by 2050, the need for affordable and sustainable housing solutions is paramount. This demand is reflected in record-breaking sales of 4.1 lakh units in 2023 across the top eight cities, representing a 33% year-on-year growth. New housing supply is also at an all-time high, with 5.2 lakh units launched in 2023, exceeding the previous year's figure of 4.3 lakh units. The momentum continued in the first quarter of 2024, with sales reaching 1.2 lakh units, a robust 41% growth compared to the same period in 2023. This trend highlights the persistent demand-supply dynamics in the housing market.
Several government initiatives have contributed to this positive trend. Schemes like Pradhan Mantri Awas Yojana-Urban (PMAY-U), which has sanctioned over 1.2 crore houses for urban beneficiaries, have helped make housing more accessible, particularly for lower-income groups. Policy reforms such as the Real Estate (Regulation and Development) Act and the Insolvency and Bankruptcy Code have increased transparency and investor confidence in the market. Furthermore, housing loans as a percentage of GDP have nearly doubled, rising from 6.6% in FY12 to 11.2% in FY24, reflecting the growing demand for housing finance. Both banks and Housing Finance Companies (HFCs) have played a crucial role in providing housing credit, with the share of outstanding housing loans as a percentage of total loans for HFCs reaching 70.8% by March 2024.
Despite these positive developments, the issue of stalled real estate projects remains a significant hurdle. These projects, involving over 4 lakh stressed units and a staggering INR 4.1 lakh crore, create uncertainty for both investors and potential homeowners. The Ministry of Housing and Urban Affairs (MoHUA) is actively seeking solutions to revive these projects. Recommendations include mandatory project registration with RERA (Real Estate Regulation and Development Act), exploring financing options, and utilising the Insolvency and Bankruptcy Code (IBC) as a last resort.
India's real estate market holds immense potential. The housing loan market itself is expected to continue growing at a Compound Annual Growth Rate (CAGR) of 13-15%, reaching INR 42 lakh crore to INR 44 lakh crore by FY26. By addressing the challenge of stalled projects and promoting sustainable and affordable housing development, the government can create a robust and thriving sector that meets the needs of a growing urban population.
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