India’s construction sector has been on an upward trajectory, evident in recent GDP data that underscores a burgeoning housing boom. In the July-September period, the construction industry grew by 13.3%, marking its most robust performance in five quarters. This growth, contributing to India's overall GDP expansion of 7.6%, positions the nation as one of the world's fastest-growing major economies.
Driven by factors such as rising incomes, a significant housing shortage in metropolitan areas, and population growth, this long-awaited boom has generated millions of jobs. The urban housing shortage, estimated at around 19 million units last year, is projected to double by 2030, further highlighting the pressing need for housing development.
Experts believe that the construction surge will continue to be a key driver of economic growth in the coming quarters. Builders are optimistic, foreseeing a housing market boom lasting two to four years, citing India's early stages in a growth cycle.
The surge in home sales, particularly in major cities like Mumbai, New Delhi, and Bangalore, has been remarkable, witnessing a 36% increase despite an 8%-18% rise in prices. This spike in sales, largely driven by first-time buyers and existing homeowners seeking more spacious accommodations, has also seen a significant uptick in new residential projects being launched.
Furthermore, salary increases in various sectors have fueled demand, with workers in e-commerce, healthcare, retail, and logistics experiencing average hikes above 10% for consecutive years. Forecasts indicate that property prices will outpace consumer inflation next year, particularly in the luxury segment.
Interestingly, the demand for housing isn't confined to major cities alone; smaller cities in southern states like Tamil Nadu, Karnataka, and Gujarat are witnessing a notable uptick, attributed to rising incomes and rural-to-urban migration.
To further stimulate the availability of affordable housing, the government is offering subsidies, and encouraging construction in smaller towns and cities. This has led to a surge in property company shares, with the Nifty realty index rising by 67% year-to-date, outperforming the blue-chip Nifty 50 index. Companies like Prestige Estates Projects, DLF, and Godrej Properties have notably seen substantial gains in their stock prices
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