PROJECT REPORT

(Submitted for Degree of B.COM. Honors in Accounting & Finance under the

University of Calcutta)

Title of the Project

A Study on Housing Market in India: Analysis of

Investment Opportunities

NAME OF THE STUDENT: Sudhanshu Ranjan Sahoo

NAME OF THE COLLEGE: Heramba Chandra College

REGISTRATION NO: 043-1111-0556-20

ROLL NO: 201043-21-0167

SUPERVISED BY:

NAME OF SUPERVISOR: Prof. Sarmistha Dasgupta

NAME OF THE COLLEGE: Heramba Chandra College

MONTH AND YEAR OF SUBMISSION: May, 2023

1
 Acknowledgement

I would like to express my heartfelt appreciation to all those who have contributed to the

successful completion of this project. Your support, guidance, and expertise have been

invaluable, and I am truly grateful for your contributions. I sincerely appreciate the inspiration;

support and guidance of all those people who have been instrumental in making this project a

success,

At this juncture I feel deeply honored in expressing my sincere thanks to Prof. Sarmistha

Dasgupta for making the resources available at right time and providing valuable insights leading

to the successful completion of my project. I express my gratitude to College Principal Prof.

Nabanita Chakrabarti who assisted me in compiling the project. 1 would also like to thank all the

faculty members of Heramba Chandra College for their critical advice and guidance without

which this project would not have been possible.

Last but not the least I place a deep sense of gratitude to my family members and my friends

who have been constant source of inspiration during the preparation of this project work. A

special thanks to my parents who supported and helped me to bring my latent talent in operation

while completing the project work.

DATE

PLACE: Kolkata

2
 Synopsis

The housing market in India has been a subject of interest for investors in recent years, as the

demand for housing has increased significantly due to the growing population and urbanization.

This paper aims to provide an investment analysis of the housing market in India, considering

various factors such as demographic changes, economic indicators, market trends.

The study looks over all the market conditions that directly or indirectly affects the housing

market. The Indian housing market has a high potential for growth, driven by factors such as

increasing urbanization, rising income levels, and a favorable regulatory environment. The

demand for affordable housing in the country is also expected to increase, as the government has

launched several initiatives to promote affordable housing and improve the housing

infrastructure. However, the study also identifies some challenges and risks associated with

investing in the Indian housing market.

Overall, the study suggests that investing in the Indian housing market can be a lucrative

opportunity for investors, but they need to carefully evaluate the market dynamics and adopt a

long-term investment strategy to achieve optimal returns. The paper concludes by highlighting

the need for further research in this area to develop more nuanced insights into the Indian

housing market and its investment potential.

Keywords: Housing market, urbanization, demographic changes, rising income level, affordable

housing, market dynamics, optimal returns, investment potential

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 Table of Contents

Chapter 1: Introduction ................................................................................................6

 Background

 Need for study

 Literature Review

 Objectives

 Methodology

(a) Area of study

(b) Sample

(c) Type of study

(d) Tools

(e) Analysis

 Limitations of the study

 Chapter planning

Chapter 2: Conceptual Framework ............................................................................ 16

 Introduction

 Factors Affecting Housing Market

 Major Players in India

 National Scenario

 International Scenario

Chapter 3: Presentation of Data, Analysis and Findings ........................................... 22

4
Chapter 4: Conclusion and Recommendations .......................................................... 38

 Conclusion

 Recommendation

Bibliography.................................................................................................................. 41

Annexure ....................................................................................................................... 42

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 Chapter 1: Introduction

Background

The housing market refers to the buying and selling of residential real estate properties, such as

houses, apartments, and condominiums. The housing market is an important component of the

economy and has a significant impact on the financial well-being of individuals and

communities.

The housing market in India has been growing steadily over the past few decades, fueled by a

rapidly growing population and a rising middle class. India's housing market has seen a surge in

demand due to the increasing urbanization of the country and the resulting need for housing.

The Indian housing market is primarily divided into two segments: affordable housing and

luxury housing. Affordable housing is aimed at middle and low-income groups, while luxury

housing caters to the high-end market.

The Indian government has also taken several initiatives to boost the housing market, including

the Pradhan Mantri Awas Yojana (PMAY) scheme, which aims to provide affordable housing to

6
all by 2022. The government has also introduced several other policies and incentives to promote

the development of affordable housing, such as tax benefits and subsidies. 1

Despite the growth of the housing market, there are still several challenges that need to be

addressed, such as lack of affordable financing options, high property prices, and inadequate

infrastructure in some areas. However, with the government’s efforts and the continued growth

of the middle class, the Indian housing market is expected to continue to grow in the coming

years.

Need For Study

The housing market in India is a significant contributor to the country’s economy, with the real

estate sector expected to reach a market size of US$ 1 trillion by 2030 and contribute 13% to the

country’s GDP by 2025. Despite its importance, there is limited research on investment analysis

of the housing market in India.

This study aims to address this gap by providing a comprehensive analysis of investment

opportunities and risks in the Indian housing market. The findings of this study will be valuable

for investors, policymakers, and other stakeholders in making informed decisions about

investments in this sector.

1
According to Pradhan Mantri Awas Yojana (PMAY) scheme, as of 2023 122.69 lakhs houses
have been sanctioned and a total of 8.31 lakh crore have been invested

7
This study will help to determine the factors that are essential to investigate before investing in

the housing market and their performance in the last 10 years i.e., FY2013 to FY2022 will be

analyzed and visualized.

Literature Review

The housing market in India has been a popular topic of research for investors and analysts alike,

given its potential for high returns and stability. Here is a brief literature review of investment

analysis of the housing market in India:

1. “Investment Analysis of Residential Real Estate Market in India” by Manish K. Singh

and Archana Singh: This study analyzes the residential real estate market in India using a

sample of 30 cities from 2011 to 2016. The study finds that the real estate market in India

has been stable, and investment in the residential real estate market in India can yield

high returns. The study recommends that investors should invest in Tier-II cities for better

returns.

2. “An Analysis of Investment in the Indian Real Estate Sector” by Ruchi Sharma and

Ashish Kumar: This study analyzes the investment opportunities in the Indian real estate

sector using a sample of 56 companies from 2011 to 2016. The study finds that

investment in the Indian real estate sector can provide high returns, and the growth

8
 potential of the sector is significant. The study recommends that investors should invest

in residential properties for higher returns.

3. “Real Estate Market Analysis of India: A Review” by Amandeep Kaur and Sarabjit Kaur:

This study provides a comprehensive review of the Indian real estate market from 2012 to

2017. The study analyzes various factors that affect the real estate market in India,

including economic growth, government policies, and demographic trends. The study

finds that the real estate market in India has been stable and is expected to grow in the

future.

4. “Investment Analysis of Indian Real Estate Sector: An Overview” by R.K. Uppal and

Anuradha: This study provides an overview of the Indian real estate sector and analyzes

the investment opportunities in the sector. The study finds that the Indian real estate

sector has been growing steadily and has a high potential for investment. The study

recommends that investors should invest in residential properties and commercial

properties in Tier-II and Tier-III cities for higher returns.

Overall, these studies suggest that the housing market in India provides significant investment

opportunities and can yield high returns. The stability and growth potential of the real estate

sector in India make it an attractive investment option for investors. However, investors should

carefully consider various factors, such as location and property type, before investing in the

Indian housing market.

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Objectives

The study of investment analysis in the housing market is important for several reasons:

• Market Understanding: The housing market is complex and influenced by various factors

such as demand and supply dynamics, economic conditions, government policies, local

regulations, and demographic trends. Conducting investment analysis helps investors

understand the current state of the housing market, including trends, risks, and

opportunities.

• Risk Assessment: The housing market is not immune to risks, including market risks,

financial risks, legal risks, and operational risks. Investment analysis helps investors

assess the risks associated with investing in the housing market. This includes evaluating

factors such as market volatility, interest rate fluctuations, legal and regulatory

compliance, construction quality, and location-specific risks.

• Return Evaluation: Investment analysis provides insights into the potential returns of

housing market investments. Through investment analysis, investors can evaluate

different housing market opportunities and assess their potential returns, helping them

make informed decisions about the profitability of their investments.

• Portfolio Diversification: Investment analysis helps investors assess the diversification

potential of housing market investments. Diversification is a risk management strategy

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 that involves spreading investments across different asset classes and geographies to

minimize risk. By including housing market investments as part of a diversified portfolio,

investors can reduce overall portfolio risk and enhance portfolio performance.

• Exit Strategy: Investment analysis helps investors plan for their exit strategy in the

housing market. This includes evaluating factors such as market liquidity, exit options,

and potential returns upon selling the property. A well-thought-out exit strategy is

essential for investors to maximize their returns and mitigate risks in the housing market.

• Decision-making: Investment analysis provides the necessary information and tools for

making informed investment decisions in the housing market. It involves evaluating

various factors, such as location, property type, market trends, risks, returns, and financial

feasibility.

In conclusion, the study of investment analysis in the housing market is essential for

understanding the market, assessing risks, evaluating returns, analyzing financing and cash flow,

diversifying portfolios, planning exit strategies, and making informed investment decisions. It

helps investors minimize risks, optimize returns, and achieve their financial goals in the housing

market.

Methodology

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 Area of Study: This study is limited in the area of Housing market in India and it’s

investment analysis. It is an examination of current practices and analysis of data on a

specific company in India.

 Sample: The data of all the components that can affect the prices or demands of the

housing markets have been taken into consideration and their data from the past 10 years

i.e., F. Y2013 to F.Y2022. It has been plotted on graphs to see their current trends i.e.,

whether a certain determinant is facing an upward or downward trend and what could be

it’s impact.

 Type of Study:

1. Primary Data: Primary data is data that is collected by a researcher from first hand

sources, using methods like surveys, interviews, or experiments. It is collected with

the research project in mind, directly from primary sources.

2. Secondary Data: Secondary data is data gathered from studies, surveys, or

experiments that have been run by other people or for another research.

The research is purely based on secondary data. Various information is collected from

the journals, annual reports of the companies, search engines and companies’ websites.

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  Tools: Various determinants of Housing markets such as Sales Volume, HAI, HPI, days

on market in various cities have been compared. Their data have been collected from the

internet and their current situation is studied.

 Analysis: In accordance to the data available on the housing markets, descriptive and

analytical study has been conducted on various factors that affect it.

Limitations of the Study

There are several limitations that can be associated with the study of investment analysis of the

housing market in India. Some of the common limitations include:

 Data Availability and Reliability: The availability and reliability of data related to the

housing market in India may be limited. Data on housing prices, rental yields, demand-

supply dynamics, and other relevant factors may not be readily available or may be

subject to inaccuracies or biases. This can impact the accuracy and reliability of the

investment analysis conducted.

 Market Volatility and Uncertainty: The housing market in India, like any other market,

can be subject to volatility and uncertainty. Market conditions, economic factors,

government policies, and other external factors can make investment analysis challenging

and may impact the accuracy of projections and forecasts.

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 Lack of Standardization: The housing market in India can lack standardization in terms of

property valuations, legal frameworks, and regulatory requirements. This can make it

difficult to conduct a consistent and comprehensive investment analysis.

 Complex Regulatory Environment: The housing market in India is subject to a complex

regulatory environment with various rules, regulations, and legal requirements. Changes

in regulations and policies can also impact the investment outlook and returns.

 Lack of Historical Data: The housing market in India has seen significant changes and

developments in recent years, and historical data may not be available or may not be

reflective of the current market conditions. This can make it challenging to conduct a

robust investment analysis that relies on historical trends and data.

 Information Asymmetry: Information asymmetry, where some market participants have

more access to information than others, can be a limitation in investment analysis. In the

housing market, there can be disparities in access to information related to property

prices, demand-supply dynamics, and other relevant factors. This can impact the accuracy

and comprehensiveness of the investment analysis.

 External Factors: The housing market in India can be impacted by various external

factors such as changes in economic conditions, demographic trends, infrastructure

development, geopolitical events, and others. These external factors can impact the

investment analysis outcomes and introduce uncertainties.

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In summary, the limitations of the study of investment analysis of the housing market in India

may include data availability and reliability, market volatility and uncertainty, lack of

standardization, complex regulatory environment, lack of historical data, information asymmetry,

subjectivity and bias, and external factors. It is important to consider these limitations when

conducting investment analysis and interpreting the findings.

Chapter Planning

 Chapter 1: Introduction (The various project preparation notes and pre-project

preparation guidelines have been assessed and kept in this chapter. It contains the need

and objective of preparation of this project paper. Moreover, this chapter plans the

conduct of the total project and how we shall approach the project, particularly under the

methodology part.)

 Chapter 2: Conceptual Framework (This chapter basically deals with the concept of

Investment analysis of the housing market and its corresponding need in India.)

 Chapter 3: Presentation of Data, Analysis and Findings (This chapter constituents of

various data available which could be used for the analysis of the performance of the

housing market and what are the factors that affect it)

 Chapter 4: Conclusion and Recommendations (The conclusions obtained after

completion of the project have been incorporated in this chapter.)

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 Chapter 2: Conceptual Framework

Introduction

The housing market in India has been growing steadily over the past few years. 2 The demand for

affordable housing has been increasing due to the growing population and urbanization. The

government has also launched several initiatives to boost the housing sector, such as the Pradhan

Mantri Awas Yojana (PMAY) which aims to provide affordable housing to all by 2022. However,

the COVID-19 pandemic has had a significant impact on the housing market, with a slowdown

in construction activities and a decrease in demand due to economic uncertainty.

Factors Affecting Housing Market

The conceptual framework of the housing market in India can be understood through the

following key components:

2
According to Imarcgroup.com, the Indian real estate market size reached USD $256.8 Billion in
2022

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 Demand: The demand for housing in India is driven by factors such as population

growth, urbanization, and income levels. The demand for affordable housing is

particularly high, given the large number of low-income households in the country.

 Supply: The supply of housing in India is influenced by factors such as land availability,

construction costs, and government policies. The government has launched several

initiatives to boost the supply of affordable housing, such as the Pradhan Mantri Awas

Yojana (PMAY).

 Prices: The prices of housing in India are influenced by factors such as demand, supply,

and government policies. The prices of affordable housing are particularly sensitive to

changes in demand and supply.

 Financing: The financing of housing in India is primarily done through bank loans and

government schemes. The availability and cost of financing can have a significant impact

on the demand for housing.

 Regulations: The housing market in India is regulated by various laws and policies, such

as the Real Estate (Regulation and Development) Act (RERA) and the National Building

Code (NBC). These regulations aim to protect the interests of buyers and promote

transparency in the market.

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Major Players in India

The real estate market in India is a highly competitive and dynamic industry, with several major

players operating in the sector. Some of the major players in the Indian real estate market are:

1. DLF Limited: DLF is one of the largest real estate developers in India, with a focus on

residential, commercial, and retail properties. The company has a presence in over 24

cities across India.

2. Godrej Properties Limited: Godrej Properties is a leading real estate developer in India,

with a focus on residential, commercial, and township projects. The company has a

presence in over 12 cities across India.

3. Tata Housing Development Company Limited: Tata Housing is a subsidiary of the Tata

Group and is one of the leading real estate developers in India. The company has a focus

on affordable housing and has a presence in over 10 cities across India.

4. Sobha Limited: Sobha Limited is a leading real estate developer in India, with a focus on

residential and commercial properties. The company has a presence in over 25 cities

across India.

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 5. Prestige Estates Projects Limited: Prestige Estates is a leading real estate developer in

South India, with a focus on residential, commercial, and retail properties. The company

has a presence in over 10 cities across India.

6. Brigade Enterprises Limited: Brigade Enterprises is a leading real estate developer in

South India, with a focus on residential, commercial, and hospitality properties. The

company has a presence in over 10 cities across India.

National Scenario

The housing market in India has been experiencing significant growth in recent years, driven by

factors such as rapid urbanization, rising incomes, and government initiatives to promote

affordable housing. However, the COVID-19 pandemic has had a significant impact on the

housing market, leading to a slowdown in demand and construction activity.

Here are some key trends and developments in the national scenario of the housing market in

India:

1. Affordable housing: The government has launched several initiatives to promote

affordable housing, such as the Pradhan Mantri Awas Yojana (PMAY). These initiatives

have led to an increase in the supply of affordable housing and have helped to address the

housing needs of low-income households.

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 2. Urbanization: India is experiencing rapid urbanization, with more people moving to cities

in search of better job opportunities and living standards. This has led to an increase in

demand for housing in urban areas, particularly in cities such as Mumbai, Delhi, and

Bangalore.

3. Technology adoption: The housing market in India is increasingly adopting technology to

improve construction processes, enhance customer experience, and promote

sustainability.

4. Impact of COVID-19: The COVID-19 pandemic has had a significant impact on the

housing market in India, leading to a slowdown in demand and construction activity.

However, the government has announced several measures to support the sector, such as

providing relief to developers and homebuyers through tax incentives and loan

moratoriums.

Overall, the housing market in India is a dynamic and evolving sector, with several opportunities

and challenges. The government's focus on affordable housing and technology adoption, along

with the sector's resilience in the face of the COVID-19 pandemic, bodes well for the future of

the housing market in India.

International Scenario

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The international scenario of the housing market is influenced by several factors, including

global economic trends, demographic changes, and government policies. Here are some key

trends and developments in the international scenario of the housing market:

1. Demographic changes: Demographic changes, such as aging populations and

urbanization, are driving demand for housing in many countries. Urbanization is leading

to an increase in demand for affordable housing in cities around the world.

2. Global economic trends: The housing market is influenced by global economic trends,

such as interest rates, inflation, and currency fluctuations. For example, a rise in interest

rates could lead to a decrease in demand for housing, while a decrease in interest rates

could lead to an increase in demand.

3. Government policies: Government policies can have a significant impact on the housing

market, particularly in areas such as affordable housing and taxation. For example, some

governments have introduced policies to promote affordable housing, while others have

introduced tax incentives to encourage investment in the housing market.

4. Technology adoption: The housing market is increasingly adopting technology to

improve construction processes, enhance customer experience, and promote

sustainability. For example, developers are using 3D printing, virtual reality, and other

technologies to design and construct buildings more efficiently.

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Overall, the international scenario of the housing market is a complex and dynamic sector,

influenced by a range of factors. While demographic changes and global economic trends are

driving demand for housing, government policies and technology adoption are also shaping the

sector.

Chapter 3: Presentation of Data, Analysis and Findings

The methods mentioned under the methodology part will be elaborated in this portion along with

graphical representation of the available about them. Their effect on the housing market will be

studied and the factors one should consider before buying a property will be discussed.

Sales Volume

The sales volume of the housing market in India can vary depending on various factors such as

economic conditions, government policies, and the overall demand for housing,

According to a report by PropTiger.com, a real estate services firm, the total sales volume of

residential properties in India increased by 8% in the financial year 2021 compared to the

22
previous year. The report states that a total of 1,81,370 homes were sold in the top 7 cities in

India, which include Mumbai, Delhi-NCR, Bangalore, Pune, Hyderabad, Chennai, and Kolkata.3

However, it is important to note that the COVID-19 pandemic has had a significant impact on the

real estate market in India, with a decline in sales volume during the lockdown period. The

market has since recovered, but the overall impact of the pandemic on the real estate sector in

India is still being assessed.

Graph 1: Bar graph showing the change in sales volume of housing units

Housing units (in 1,000s)

350 329.24

300 279.82
267.96
244.69 242.33 245.86 232.9
250 228.07
215
200
154.43
150

100

50

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Statista

3
According to PropTiger.com, the demand for affordable housing has increased, with homes

priced under INR 45 lakhs ($60,000) accounting for 47% of the total sales in the financial year

2021.

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Findings

As shown in the above chart, there has been a constant decline in the sales volume of the housing

units with a sudden dip in 2020, due to covid 19. 2021 saw a decent recovery, although still less

than the figure in 2019. As per 2022 the sales volume was at 215,000, again less than that the

value of 2021. It is predicted that the sales volume will increase in 2023 looking at current

market trends.

It is important to consider the current state of the economy and the housing market. If the

economy is strong, with low unemployment and steady economic growth, the housing market is

likely to be stable or even thriving. On the other hand, if the economy is struggling, with high

unemployment and slow growth, the housing market may be weak or experiencing a downturn.

RBI’s Housing Price Index (HPI)

Trends in all-India HPI and its constituent Cities were also disseminated regularly by the RBI.

The price data on transacted houses while registering of a house are collected from the

Registration Departments of respective state governments.

This approach attempts to develop a house price index based on registration price data and

stratified weighted average measures, where transactions are Stratified in three categories, viz.,

small, medium, and large houses and different geographical Wards/zones. However, this measure

captures prices relating only to those houses that are sold during a Period and not relevant to all

houses in the economy.

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 Graph 2: Line Graph Representing the Rise in HPI

200
HPI of selected cities
180

160

140

120

100

80

60

40

20

Ahmedabad Bengaluru Chennai Hyderabad Kolkata Mumbai

Source: NHB Residex

Findings

From the above chart and the corresponding line graph the HPI is increasing although after

facing slight decline during the COVID 19 period. 4

4
According to Indian Express, RBI’s HPI recorded a 2.79% growth to 302 in the third quarter as

compared to 293.8 when it showed a 3.1% growth a year ago despite the rise in interest rates.

25
The cities showing a linear growth in HPI such as Ahmedabad and Hyderabad would be a better

place to invest, as there’s a chance to get higher returns if one invests in them, rather than those

showing negligible growth such as Mumbai and Chennai.

It’s also worth noting that even if the HPI is high, there may still be opportunities to find a good

deal, such as buying a house that needs renovations or negotiating with the seller. It’s important

to do your research and work with a trusted real estate agent to help you navigate the housing

market and make an informed decision.

Housing Affordability Index (HAI)

The Housing Affordability Index (HAI) is a measure used to determine whether the typical

household can afford the typical home in a particular area. It is typically calculated by taking the

median home price in a particular area and dividing it by the median household income. The

resulting ratio Indicates the percentage of a typical household’s income that would be required to

purchase a typical home in that area.

A higher HAI Indicates that housing is more affordable, while a lower HAI indicates that

housing is less affordable. The HAI can be used by policymakers, researchers, and individuals to

track changes in housing affordability over time and to make informed decisions about housing-

related issues.

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Factors contributing to the decline in HAI in India include rising house prices, stagnant incomes,

and high interest rates. Additionally, supply-side issues such as a lack of affordable housing stock

and inefficient land use policies have also contributed to the problem.

Graph 3: Housing Affordability Index of Selected Cities

HAI
Mumbai
Delhi
Chennai
Pune
Bengaluru
Hyderabad
Jaipur
Kolkata
Ahemdabad
Surat

0 10 20 30 40 50 60 70 80

Source: Business-Standard

Note: Higher HAI indicates greater affordability

Findings

Over the years, the HAI for India fluctuated between 50 and 70, indicating that housing

affordability in India remained a challenge. Although it should not be the only concern while

buying a house. For example, although the HAI of Mumbai is the lowest at 28.2, the demand of

real estate in Mumbai is also high meaning it would build high equity over time and at the time

of selling, it could fetch a good return on investment. But the result is not guaranteed it

completely depends upon the risk appetite of the investor.

27
Mortgage Rates

Mortgage rates in India are determined by the Reserve Bank of India (RBI) and are influenced by

various factors such as inflation, economic growth, and market conditions. 5 The interest rates on

mortgages in India can be either fixed or floating. Fixed-rate mortgages offer a stable interest

rate for the entire loan tenure, while floating-rate mortgages are linked to a benchmark rate and

can vary depending on market conditions.

Graph 4: Average Mortgage Interest rates in India

Average Mortgage Interest Rates

12.00%
10.30% 10.15%
9.80% 9.50%
10.00% 8.80%
8.65% 8.35%
8.00% 7.15% 7.25%

6.00%

4.00%

2.00%

0.00%
2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Bank Bazaar

5
According to Bank Bazar, as of 2021, the average mortgage interest rate in India ranged from

6.65% to 7.25% depending on the lender and the type of loan.

28
Findings

From the above graph, the mortgage rates have been decreasing over time. This could be a

positive factor when it comes to buying a property using housing loan but even here certain

matters should be considered:

 Loan Tenure: One should consider how long will it take them to repay the loan. If the

interest rate is high, it is advisable to repay the loan as soon as possible.

 Down Payment: It is important to have enough savings to make sustainable down

payment, as this will lower the amount of the loan and the interest paid over time.

 Loan Type: There as various types of housing loans available such as fixed rate loans,

floating rate loans, and hybrid loans. By looking at the current market trend it could be

said that a floating rate loan would be a more viable option when compared to fixed rate

loan.

Days on Market

Days on market (DOM, alternatively active days on market, market time, or time on market) is a

measurement of the age of a real estate listing. The statistic is defined as the total number of days

the listing is on the active market before either an offer is accepted or the agreement between real

estate broker and seller ends.

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The days on market for residential properties in India can range from a few weeks to several

months.6 But it should not be the only concern of the investor as other economic factors also

come into play. For example, if a particular city is experiencing a surge in population growth and

a booming economy, it may be a good time to invest in the housing market, even if the days on

market for properties is slightly higher than average.

Thus, days on market can be used as a tool to determine the demand for real estate in a particular

geographical location. A low number of days on market may indicate a strong demand for homes

in a particular area, while a high number of days on market could suggest that the market is slow

or oversaturated.

Graph 5: Average Days on market of selected Cities

Time taken(in months)

16

14

12 13.5 13.5

10 11
10.5 10.5 10.5
10
8

0
Mumbai Delhi-NCR Bangalore Chennai Hyderabad Pune Kolkata

6
. According to a report by PropTiger.com, the average time taken to sell a property in the top 9
cities in India was around 10-12 months in 2020, with the highest being in Mumbai at 16 months and the
lowest being in Hyderabad at 6 months.

30
Source: Business Today

Findings

Above show graph shows the days on market of a few cities. Similarly, before investing in the

real estate of any area, one should what is the days on market of that area to get an idea how long

will it take them to sell it.

Rent vs Buy Analysis

Rent vs buy analysis is a financial analysis that compares the costs and benefits of renting versus

owning a property over a certain period. This analysis considers various factors, such as the cost

of renting or buying, the length of time you plan to stay in the property, the interest rates, and the

potential appreciation or depreciation of the property’s value.

The goal of a rent vs buy analysis is to determine which option is the most financially beneficial

for you based on your unique situation. The analysis will compare the total cost of renting a

property over a certain period to the total cost of owning a property over the same period,

including the initial down payment, mortgage payments, property taxes, and maintenance costs.

The following procedure must be done in order to conduct Rent vs Buy analysis –

1. Determine the Time Horizon: The first thing to do is to determine how long do you plan

to stay in the property. If you’re planning to stay for a long time, it might make more

sense to buy rather than rent.

31
2. Determine your Budget: One should determine how much they are able to afford to spend

on either buying or renting a property as this will help in narrowing down the options.

3. Research the real estate market: Do a thorough analysis of the market to see the current

trends in the market and the average prices of properties and find one suitable to your

budget

4. Estimate the cost of Buying: Cost of buying includes purchase price, down payment, and

any other fees associated with buying the property. One should also consider ongoing

costs such as mortgage payments, property taxes, insurance, and maintenance costs.

5. Estimate the cost of Renting: Cost of renting includes monthly rent, security deposit, and

any other fees associated with renting. One should also consider expenses such as renters’

insurance and utility costs.

6. Calculate the financial impact of owning: When you buy a property, you are building

equity over time. You should calculate the potential appreciation of the property and the

potential tax benefits associated with owning a property.

7. Compare the costs of renting vs owning: Once you have estimated the costs of buying

and renting, you can compare the two to determine which option is more cost-effective.

8. Decide: Based on the analysis, you should be able to make an informed decision on

whether to rent or buy the property.

32
In conclusion it is essential to note that buying a property is more feasible when you’re

considering living in it for the long term. Otherwise renting could be a better option if you’re not

planning to permanently live there.

Demographic trends

Various demographic trends affect the Indian housing market, some of which are:

1. Urbanization: India’s urban population has been growing steadily, and it is expected to

reach 600 million by 2030. This growth is leading to an increased demand for housing in

urban areas.

2. Young population: India has a large population of young people, with more than 65% of

the population under the age of 35. This demographic group is likely to drive demand for

affordable housing in the coming years.

3. Nuclear families: The trend of nuclear families, where a couple and their children live

separately from their extended family, is becoming more common in India. This is

leading to an increased demand for smaller, more affordable housing units.

4. Rising income levels: India’s middle class is growing, and with it, their purchasing

power. This has led to an increase in demand for larger, more luxurious homes.

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 5. Migration: India has a large population of migrant workers who move from rural areas to

cities in search of employment. This is leading to an increased demand for rental housing

in urban areas. 7

Overall, the housing market in India is likely to be influenced by these demographic trends in the

coming years. Developers and policymakers will need to keep these trends in mind while

planning new housing projects and policies.

Graph 6: Net Migration of People in India

Net Migration(in thousands)

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-50

-100
-142
-158
-150

-200

-250 -266 -266 -271

-282 -280 -285 -288
-296
-300

-350

Source: United Nations Department of Economic and Social Affairs

7
According to Macrotrends, the net migration for India was -0.356 per 1000 population, a 3.52%
decline from 2020

34
Findings

The negative values suggest that there is more emigration from India than Immigration to India.

This indicates that India is experiencing a net loss of people due to migration.

Graph 7: Inter State Migration in India

Source: Economic Survey of India

35
Findings

The above diagram shows the number of people moving in and out of each state in India. The

states with high immigration will have more demand for houses than those with high emigration.

Thus, selling houses in these states will be comparatively easier.

Comparative Analysis

There is a variety of investment instruments, Stocks and real estate have the potential to provide

high returns but are also subject to market fluctuations and require significant capital. Bonds and

FDs are considered less risky but offer lower returns. Nifty 50 provides investors with exposure

to the Indian stock market without the risks of investing in individual stocks. Investors should

carefully consider their investment goals, risk tolerance, and financial situation before investing

in any of these asset classes.

36
 Graph 8: Comparison of Different Investment Instruments

Peformance of Investment Instruments

40 %

30 %

20 %

10 %

0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

-10 %

-20 %

Stock Nifty 50 Bonds Real Estate Fixed Deposit

Source: BSE Sensex, FIMMDA-NSE MIBOR Index, NHB Residex

Findings

From the above graph we can see the performance of various investment instruments in the last 10

years. Although real estate is a risky asset, the return on investment does not justify the risk. We see

dips in returns in housing market in the year 2015 and 2020. Granted Stocks and Nifty 50 have also

performed similarly but the return on investment they provide is way more than real estate. Even if we

compare estate with safer alternatives such as bonds and FDs, we can see that they have performed

better than real estate as they did not face any decline even during the year 2015 and 2020.

37
 Chapter 4: Conclusion and Recommendations

Conclusion

In conclusion it could be said that investing in the housing market is a long-term commitment so

a thorough research prior to that is necessary. It is without a doubt a risky asset and if not bought

with proper analysis of cost over the long term, could turn into a liability. Many factors play a

role while determining whether investing in the housing market would be feasible or not.

Sales volume have been seeing a constant decline in the housing market meaning the level of

activity has been decreasing over the years. This could an indication that one you buy a property

it could take some time to liquidate that asset and get back your money invested. It also depends

upon the days on market of that area. The more the days on market of an area, the longer it will

take you to sell that property.

The Housing Price Index (HPI) of many cities in India have seen a steady increase over the years

which is a good sign as a high HPI means that the value of the real estate will grow over time.

Apart from HPI, Housing Affordability Index (HAI) is another thing one should consider before

investing in the housing market. It reflects how affordable the real estate of a particular area is.

Other factor such as demographic trends also play an important role. If we could see the net

migration of a certain area, we could determine the size of the market. In India, the net migration

38
is seeing a negative trend over the few years so that could be a concern before investing in the

real estate market as it indicates that the people in market for buying a house is shrinking,

Recommendation

In the current market situation, it will be recommended to do your due diligence before planning

to invest in the housing market. It should be known that as the net migration is seeing a

downward trend, the market size is decreasing thus it might be difficult to sell a property easily.

One should look for factors such as days on market, HPI, HAI of a particular region before

buying a property there. Days on market can give an idea about the demand for real estate in that

area. HPI can show the rise in prices of real estate and HAI can show how affordable is it to buy

a property in any city. As per the research, it is advisable invest in Tier-II cities for better returns.

If we look at the comparative analysis of the ROIs of different investment instruments, we can

see that housing market is not performing well enough to make it a top priority for any investor.

If your sole purpose is to gain interest over your investment, FDs might be a better option than

real estate as they do have any risk factor attached to them and yet they are providing same

returns as real estate. plus, the money becomes less liquid when u put it in a real estate.

If you want to invest in housing market are not ready to put in a hefty sum of money for a long

term, the best option will be to invest in Real Estate Investment Trust (REIT). Buying and selling

of REIT shares is easier than it is with a physical property. They obviate the need for market

specific knowledge and property management while making it easier to diversify your real estate

39
portfolio.8 The benefits of a REIT investment include liquidity, diversification, and passive

income in the form of high dividends. The potential downsides of a REIT investment include

taxes, fees, and market volatility due to interest rate movements or trends in the real estate

market.

8
According to Emerald.com, the percentage of Indian REITs in a portfolio goes from 9% at the
smallest risk level to 19% at the maximum risk level. This shows that including Indian REITs in a
diversified portfolio of assets is an effective way to spread out the risk.

40
 Bibliography

Books/Journals

 Singh, Kanhaiya and Subramanian, Arvind, Housing Market Dynamics in India:

Evidence, Trends, and Outlook, IMF Working Paper, 2020

 Nair, Ramesh, Real Estate Market in India: Trends, Challenges and Outlook, Knight

Frank India, 2021

 Nag, Bishwajit, The Indian Real Estate Industry: A Market Analysis, International Journal

of Management, Technology, and Social Sciences, 2021

Websites

 Residex.nhbonline.org.in

 Wikipedia.org

 Businesstoday.in

 Business-standard.com

 Statista.com

41
 Annexure

Annexure-IA

Supervisor’s Certificate

This is to certify that Mr. SUDHANSHU RANJAN SAHOO, a student of B.Com. Honours in

Accounting & Finance of HERAMBA CHANDRA COLLEGE under the University of Calcutta

has worked under my supervision and guidance for his/her Project Work and prepared a Project

Report with the title A STUDY ON HOUSING MARKET IN INDIA: ANALYSIS OF

INVESTMENT OPPORTUNITIES, which he is submitting, is his genuine and original work to

the best of my knowledge.

Signature:

Name: Prof. Sharmistha Dasgupta

Designation:

Name of the College: Heramba Chandra College

Place: KOLKATA

Date:

42
Annexure-IB

Student’s Declaration

I hereby declare that the Project Work with the title A STUDY ON HOUSING MARKET IN

INDIA: ANALYSIS OF INVESTMENT OPPORTUNITIES is submitted by me for the partial

fulfilment of the degree of B.Com. Honours in Accounting & Finance under the University of

Calcutta is my original work and has not been submitted earlier to any other University

Institution for the fulfilment of the requirement for any course of study. I also declare that no

chapter of this manuscript in whole or in part has been incorporated in this report from any

earlier work done by others or by me. However, extracts of any literature which has been used

for this report has been duly acknowledged providing details of such literature in the references.

Signature:

Name: SUDHANSHU RANJAN SAHOO

Address: 195, D block, Bandipur Road, Aurobindo park, Kolkata 700070

Registration No: 043-1111-0556-20

Roll No: 201043-21-0167

Place: KOLKATA

Date:

43