Pune, 6th December 2022: Pune’s residential real estate market again proved its strength in 2022 as demand increased convincingly after the pandemic. Even during the lockdown periods of 2020 and 2021, interest in buying homes in Pune remained strong but the true demand potential emerged only once people were free to visit sites again.
The interest rate hikes by the RBI in 2022 did result in demand pulling back to some extent, but this was temporary. Pune’s developers compensated as best as possible with cost-easing measures for customers by partially or fully waiving some of the statutory fees.
However, they had minimal scope to improve overall costs for homebuyers since their construction costs rose further by at least 12-15% in 2022. Pune saw housing prices go up during the year. In different areas and projects, ticket sizes increased by at least 5%, and in major projects in select locations, by as much as 8-10%.
Still, homebuyer sentiment did not reduce as much as was predicted. Various real estate consultants confirm that the festive season was hugely successful for the Pune residential market, with housing sales rising by at least 15% in most areas.
The demand for more spacious homes, first seen emerging during the Covid-19 pandemic, continued to be the headline trend for Pune’s housing market in 2022. While many companies asked their employees to return to office during the year, quite a few of the bigger MNCs allowed a hybrid working model to continue. This meant that Puneris continued to need more space for home offices.
But the primary trend we saw about home sizes was that the demand for bigger flats has gone beyond the pandemic impact altogether. Pune’s entrepreneurial mindset became even more well-defined in 2022, with many more citizens consciously choosing consulting and gig work over office jobs. At our site offices in Moshi and Punawale, our sales staff noted that at least 20% more buyers described themselves as self-employed than in 2019.
Investor activity in Pune’s housing sector increased by at least 30% during the year, primarily because of the hardening property prices and huge demand for quality projects. Rental housing demand also surged a lot during the year, which also made residential real estate even more attractive for investors.
Predictions for 2023
Further repo rate hikes are expected in 2023, but they will likely be lower than before. Home loan interest rates will harden to some extent. This will reduce the demand for affordable housing in Pune’s outskirts, as more lower mid-income buyers may decide to postpone buying homes.
However, mid-range and luxury housing buyers will be less affected, and the demand for spacious homes in good projects will continue. This is because air quality, security, and water issues will be among the biggest concerns for Pune’s homebuyers in 2023.
Townships and gated communities, which became the most sought-after housing types during and after the pandemic, will see increased demand as more of Pune’s homebuyers seek the comfort, security and health-enhancing amenities that these projects offer.
Also, Pune’s crime rate rose significantly in 2022, and one of the recurring questions from homebuyers now is about security measures. Multi-level security features, which are available in big township projects, have become a very important consideration.
2023 will see very few Puneris looking for the lowest housing prices. The impetus will be on quality, comfort, convenience, health-supporting features, and security, and homebuyers will continue to pay more in order to get these must-haves.
Demand for flats in smaller projects is likely to reduce further as homebuyers focus on lifestyle aspects rather than the bottom line. The best-selling ticket sizes in 2023 will be from Rs. 70 lakh to 1.5 crores, followed by luxury homes costing Rs. 2 crores and above.
We do not see the number of home loan applications reducing during the year. While home loans for affordable housing will likely decline during the year, this will be balanced out by loan applications for mid-range and premium homes.
Interestingly, the demand for bigger, good quality homes in Pune from Mumbai citizens increased by over 20% in 2022 as more and more people from the financial capital looked for a better lifestyle. This trend will likely increase in 2023 as MMR’s problems with worsening air quality, urban chaos, and out-of-control housing prices worsen.
A large part of the demand from Mumbaikars who are looking for a more wholesome lifestyle in Pune is for integrated townships on the city’s outskirts and in Pimpri-Chinchwad Municipal Corporation. As a result, developers with such projects will very likely add new phases to their existing projects in 2023.
Housing prices in Pune will likely increase by at least 2-3% in 2023 since demand remains strong for superior housing options. Prices for affordable housing are unlikely to increase since buyers in this category are already struggling with higher EMIs. This leaves little space for developers of budget housing projects to raise prices. Investors too will concentrate on high-grade projects and favour 2, 3 and 4 BHK apartments as demand for large-format homes in Pune will continue over the next few years.
About the Author:
Akash Pharande is Managing Director – Pharande Spaces, a real estate construction and development firm famous for its township projects in West Pune and beyond.