CHART OF THE WEEK 📈
Data for supply of new houses, and of inventory suggest luxury (and ultra-luxury) home sales have been going off the roof, in 2022.
Of the 1.8 lakh units sold in the first half of 2022, 25,700 were luxury homes - that’s 16% of the total home sales. Luxury homes are defined as those priced above Rs. 1.5 crore. To put that into perspective, in the whole of 2019, 2.6 lakh units were sold, of which only 7% were luxury homes.
Of what was sold in the whole of 2019, we’re already nearly there in just the first half of 2022.
Why is this happening?
Post COVID, there is higher demand for luxurious amenities, a shift towards a healthier lifestyle, and an increased sense of need for future security.
Buyers have actively purchased upscale properties to take advantage of market tailwinds like low interest rates, high disposable incomes, reduced stamp duties, and favourable policy.
NRIs are investing in premium Indian real estate in the expectation of good returns due to favourable exchange rates and volatile stock markets globally.
Looking at the macroeconomic environment now though, it would be interesting to see if the same continues into the second half of 2022.
Our take is that there will be a slowdown, but not a dramatic one. After all, the luxury and ultra luxury segments are relatively less elastic.