India’s household sector serves as the primary source of financial resources through savings, contributing 70% of total gross domestic savings. Growth in housing sales in cities has been particularly impressive, indicating that urban households are diversifying the use of their savings.
Data from the Economic Survey shows that residential real estate sales in major Indian cities are at their highest since 2013! In 2023, a whopping 4.1 lakh units were sold in the top eight cities alone, a significant increase of 33% compared to the previous year. To meet this growing demand, developers are building more properties than ever before. A record 5.2 lakh new homes were launched in 2023, surpassing the previous year’s figure by almost a lakh, data analyzed by PropTiger showed.
The momentum hasn’t slowed down. The first quarter (Q1) of 2024 saw a phenomenal 41 percent growth in sales compared to the same period last year, with a record 1.2 lakh units sold. Since mid-2022, the number of new homes launched has consistently crossed the one lakh mark every quarter.
Similarly, personal loans for housing have soared, in line with increased demand for housing, the Economic Survey noted.
Most households save in two ways: through financial assets (such as bank deposits, stocks and mutual funds) and through physical assets (such as real estate, gold and other durable goods), global brokerage firm BofA Securities said in a May 2024 report.
In 2022, more than half (56%) of household savings were in financial assets, double the amount a decade ago. This suggests a shift towards more diversified saving methods. Despite the increase in financial savings, a large share (77%) of household assets are still tied up in real estate.
On average, an Indian household owns 77% of its total wealth in real estate, 7% in other durables and 11% in gold.
First print: Jul 22, 2024 | 2:15 PM IST