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India's Construction Sector Levels Up-Driven by Housing Demand

India's construction sector is experiencing a significant upswing, fueled by a booming housing demand that is reshaping the country's economic landscape. Recent GDP data revealed a remarkable 13.3% growth in the construction sector from July to September compared to the previous year, marking its best performance in five quarters. This robust expansion has propelled India's overall GDP growth to a forecast-beating 7.6%, positioning the nation as one of the world's fastest-growing major economies. The construction surge follows several years of economic challenges, including debt and pandemic-induced downturns, with the sector gaining momentum last year and reaching its peak in the current year. Contributing factors include rising incomes, a severe housing shortage in major cities, and robust population growth.

This construction boom, creating millions of jobs, is anticipated to persist for years, according to industry experts. India's urban housing shortage of approximately 19 million units in 2022 is expected to double by 2030, further driving demand. Builders and real estate experts express optimism about the sector's long-term prospects, with expectations that the housing market could thrive for another three to four years. Home sales in major cities surged by 36% in the July-September quarter, reaching over 112,000 units, despite an 8%-18% increase in prices. The surge in demand is attributed to first-time buyers, with nearly 80% of houses purchased by end-users. Salary hikes in key sectors, such as e-commerce, healthcare, retail, and logistics, have further fueled demand, while the government's initiatives to promote affordable housing are encouraging construction in smaller towns and cities. Overall, the construction sector's robust growth is poised to play a pivotal role in India's economic trajectory in the coming quarters.