Nobody will hit jackpot with housing investments: Anuj Puri

In India, housing cannot be compared to other investment routes such as stocks, fixed deposits and gold as a self-owned home in India is the fulcrum from which Indians leverage financial and psychological independence, says Anuj Puri, Chairman, Anarock Property Consultants.

It is true that many millennials tend to favour rental rather than self-owned homes, especially towards the beginning of their careers. However, their choices tend to change as they age. Freedom from a lifelong rental trap is very important if one wants one’s financial options to open up towards middle age, he noted.

Observing that housing used to be the No.1 investment instrument in previous years; Puri said due to the turmoil brought on by regulatory changes such as RERA and GST - and the unscrupulous activities by some developers that these regulatory changes sought to correct, the end-users and investors are currently a confused lot and await stability and clarity on the market.

Puri also said that there is still a massive burden of unsold homes on the market, especially in the highly-incentivised affordable segment, have already begun picking up after almost four years of prolonged slowdown. The Government’s Housing for All by 2022 vision has made affordable housing attractive for both buyers and developers. The most remarkable return of demand is for ready-to-move homes. “RTM homes are, almost by definition, free of construction-linked risks, do not attract GST and also offer buyers the ‘what-you-see-is-what-you-get’ assurance. Not to mention the instant gratification of immediate possession,” he sought to explain.

Sales improved 13% in the first three quarters of 2019 combined as against the corresponding period in 2018, and by 23% in that period two years ago. In fact, housing sales have almost reached the levels we saw in the first three quarters of 2016, before DeMo hit in Q4 2016. Anarock data reveals that the three quarters of 2019 collectively saw sales of nearly 2.02 lakh units in top 7 cities (during the same period in 2016 it was 2.07 lakh units).

These sales numbers do not signal a full-fledged market bounce-back. The reason for this is that even if we take latent end-user interest for granted, the bigger worry for the Indian housing market is the lack of sufficient investor activity in the sector, he said.

Puri believes that investors are still wary and the yield on housing currently do not exceed 3.5%. “As for returns on investment, it is best to accept that nobody will hit the jackpot with housing investments anymore. A hope of steady growth is what defines any wise investment philosophy. This is what Indian housing will deliver to investors going forward, even as more and more Indians finally realise their dream of living in their own homes,” he concluded.