Real estate cycle nearing peak; demand thrives but high cost a risk: Housing.com CEO

Property demand boom post Covid after almost a decade of lull may be in its mid-cycle or nearing the top, according to Housing.com. Real estate demand still thrives in the major markets as of now but the skyrocketing prices pose a threat to the demand story, says the CEO of the integrated real estate services portal.

"Real estate has come off a very long down cycle between 2013 and 2020. Since 2021, it has picked up slowly. But the last year has been a frenzy. With that kind of frenzy, it is pretty much the mid cycle or nearing the top. And then it starts to sort of gradually taper down," says Dhruv Agarwala, group CEO, Housing.com and Proptiger.com, expressing confidence that residential real estate demand may remain in the next one and half years.

Agarwala, however, points out that even though the demand thrives, high prices could pose a risk. "There was a lot of pent up demand post COVID. Pent up demand lasts for a longer time. But I think the risk to this demand story is pricing. Because if prices just go up too much, then the end user will get crowded out," he said.

"Developers might be happy because if prices keep going up, then speculators have a play. It crowds out an actual buyer. And the problem with that is, at some point, music stops and there’s no speculator left to buy at higher prices. The speculators then disappear, end users are not there, and the market corrects. That’s how cycles are built fundamentally. Next one and a half years, I’m pretty confident we are in good shape for residential real estate," Agarwala added.

"We’ll have to wait. It just can’t go to the sky. It’s impossible. How many people now can actually afford a home in Gurgaon?” he said.

Airport boom to Greater Noida

The Greater Noida market in the NCR is expected to get a massive fillip once the new airport is operational in Greater Noida.

"Greater Noida is going to boom once Noida international airport at Jewar starts. There is no country in the world where the presence of an international airport has not helped the growth of the area," he said.

"It’s going to be massive. Foreign tourists will come in, they will need housing, hotels, Airbnbs, among others. Offices will come up in that area because people will not want to travel all the way to Delhi. Greater Noida has great potential with the international airport coming up," Agarwala adds.