The housing industry in India is in a phase of degrowth, with hopes centered on the budget.

The housing industry in India is in a phase of degrowth, with hopes centered on the budget.

Delhi, The real estate sector is now looking to the upcoming Budget for favorable economic conditions, which are crucial to reviving demand conditions, after a sharp increase in housing prices and high borrowing costs destroyed buyers' appetite in 2024, causing new home sales in India to decline for the first time since the pandemic.

A high base in the previous year, a decline in the supply of new homes, and price appreciation were some of the factors contributing to the de-growth in the Indian housing market, which followed three years of exceptional growth after the COVID-era collapse.

The year 2024 was described as a "mixed bag" for the Indian residential market by Anuj Puri, Chairman of Anarock, one of the top housing brokerage businesses in the nation. He pointed out that although demand for cheap housing was low, luxury home launches and sales were robust.

According to data from consultant Anarock, the residential real estate sector in India, which is projected to be worth over USD 300 billion, saw a slight decline in sales volumes in 2024 of 4%. In 2021, 2022, and 2023, housing sales increased by 71%, 54%, and 31%, respectively, following a 47% decrease in 2020.

Following the pandemic, the ultra-rich began snatching up opulent apartments,penthouses and villas at the very beginning, and this year was no exception.

"No doubt, the central and state elections played spoilsport to some extent, but it would also be fair to attribute at least some of the decline to the high base considering that in 2023 both new launches and sales had attained all-time high peaks," Puri stated.

In contrast to the average 21% year-over-year increase in prices this year, he anticipates that the housing market will stabilize in 2025 and see modest price growth. "Much also depends on what the upcoming Union Budget holds in store," Puri stated.

In order to improve house sales, especially in the cheap and mid-income categories, real estate developers have long called for an increase in the Income Tax Act's deduction ceiling for interest on home loans.

The segment that specializes in luxury and ultra-luxury housing, which does not require financial assistance, kept growing.

The majority of real estate firms concentrated on high-end residential developments, with property giant DLF Ltd. spearheading the introduction of the ultra-luxurious 'The Dahlias' project in Gurugram, which consists of approximately 400 units and has an estimated sales value of ₹26,000 crore. This project may be the biggest one announced thus far in terms of potential revenue.