Demand for spacious units remained high, with average 3 & 4BHK prices increasing up-to 25% YoY across cities

Pune saw the highest annual drop in unsold inventory at 10% YoY followed by Delhi NCR and Ahmedabad

Amidst sustained positive sentiment in residential real estate, average housing prices surged by 10% annually during Q1 2024. While each of the top eight cities witnessed annual price appreciation, average housing prices in Bengaluru, Delhi NCR, Ahmedabad, and Pune registered double digit growth. On a quarterly basis too, housing prices across majority of the cities witnessed a noticeable 2-7% increase.

Although the market continued to be largely favorable for both homebuyers and developers, unsold inventory at an India level witnessed a marginal 3% YoY increase. Notably, Pune led with a significant 10% YoY drop in unsold inventory, closely followed by Delhi NCR and Ahmedabad, each recording an 8% annual reduction. As of Q1 2024, unsold inventory across the top eight cities stood close to 10 lakh units, with MMR alone having almost a 40% share. Interestingly, robust demand momentum led to a slight drop in unsold units on quarterly basis. Although, Hyderabad and Bengaluru witnessed yearly increases in unsold inventory, both cities saw a slight quarterly dip. Developers are likely to keep a close watch on available stock and anticipated demand while timing their new launches in the near-term.

Mr. Boman Irani, President of CREDAI National stated, “The surge in housing prices is a direct consequence of the robust housing demand that we’re witnessing – especially in premium and luxury housing – by homebuyers across the country. These are directly linked to not just a stable lending eco-system but also the emergence of various micro-markets that have been the primary beneficiaries of significant infrastructural projects – which has altered the demand-supply dynamics in residential real estate and we do not foresee this momentum to slow down in FY24/25 as well.”

“Residential real estate in India continued to benefit from positive sentiments in the first quarter of 2024, with average housing prices increasing by an impressive 10% on an annual basis. This upward trend reflects the resilience and dynamism of the residential sector, buoyed by factors such as stable repo rates and infrastructure upgrades across most of the major Indian cities. With prospects of reduction in benchmark lending rates in the ongoing fiscal year, affordability can improve in the near term, especially for the EMI dependent home buyers”, added, Badal Yagnik, Chief Executive Officer, Colliers, India   

Pan India residential price trends (Q1 2024) (in INR/sq ft) –

Source: Liases Foras, Colliers

All the prices are based on carpet area

*NCR- National Capital Region

**MMR- Mumbai Metropolitan Region

“In the top 8 cities of India, property prices have seen a notable 10% year-on-year increase, alongside strong sales, and new supply introductions.Bengaluru leads with a 19% spike in housing prices, followed by significant escalations in Delhi NCR, Hyderabad, and Pune. Factors like luxury demand, upcoming infrastructure projects, and strategic launches drive these increases. With moderate inflation and interest rates, the real estate sector is expected to maintain demand due to affordability. The prices could increase by 10-15%, bridging the gap between affordability and inflation-adjusted prices”, said Pankaj Kapoor, Managing Director, Liases Foras.

At 19% YoY increase, Bengaluru saw the highest price rise across top eight cities

Bengaluru witnessed the most significant annual price surge among India’s top eight cities, with prices soaring by 19%. Within Bengaluru, the Periphery and Outer East micro market saw the steepest upward movement at 32% YoY increase. It was followed by the Periphery and Outer North with 18% annual growth in average housing prices. Key IT hubs like Whitefield and KR Puram witnessed notable demand for spacious units, particularly 3BHK and 4BHK configurations.

In Delhi NCR, housing prices saw a substantial annual increase of 16%, with Dwarka Expressway, notably witnessing a 23% increase in average capital values. With significant number of new launches, the trend is likely to continue in residential catchment areas along Dwarka Expressway throughout 2024.

Unsold inventory in Pune witnessed the steepest drop at 10% YoY

Of the eight major cities, Pune witnessed the steepest drop in unsold inventory levels. The 10% YoY decline in unsold units, highlights strong housing demand across the city. The reduction in unsold units coincides with a major 13% annual rise in average housing prices. This price growth was driven by substantial launches in the high-end and luxury segments. Key localities like Camp and Baner witnessed significant YoY price increases, ranging between 20-23%. Going ahead, with continued progress on key infrastructure projects such as Metro Line 3 & Pune Ring Road, and completion of marquee Grade A commercial developments, areas like Baner, Chinchwad, Shivaji Nagar, and Nagar Road are likely to witness high residential activity in the near to mid-term.

“Demand for housing units across categories, especially luxury and ultra-luxury segments has remained upbeat for the last few quarters. While Mumbai and Delhi have been featured regularly in the global list of cities with highest millionaires, Bengaluru promises to be a fast-emerging city in terms of wealth accumulation and growth in millionaire population. As a growing economic hub, Bengaluru has seen significant launches in luxury residential projects, especially in the Periphery & Outer North micro market. Residential developers are likely to further capitalize on the growing demand in the luxury/ultra-luxury segment and launch more upscale projects catering to the discerning tastes of affluent homebuyers,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Also Read: Luxury Sales Share At 21% from 7% in 5 Years, Affordable Housing Down to 20% From 37%

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However, there’s more to the story than just affordability. Here’s a closer look at how the MMR residential market performed in 2023 and the factors fuelling its housing boom.

MMR Residential Real Estate Snapshot:

• The MMR housing market holds the top position in both supply and demand, with new launches of approx. 1.57 lakh units in 2023 and sales at approx. 1.53 lakh units – both at all-time high levels.

• Both housing supply and sales in MMR have been on an upward trajectory since 2020. New launches and housing sales in 2023 surged 27% and 40% annually when compared to 2022.
• MMR witnessed a 15% growth in average property prices – from approx. INR 11,890 per sq. ft. in 2022 to approx. INR 13,700 per sq. ft. in 2023.

• Mumbai emerged as MMR’s undisputed champion in 2023 with the highest year-on-year jump in housing sales compared to 2022. Mumbai’s peripheral western suburbs are seeing a protracted housing boom, with sales skyrocketing by a whopping 82% compared to last year.

Source: ANAROCK Research

Factors fuelling MMR’s Housing Boom:

• Strong Economic Outlook: MMR is the financial and commercial powerhouse of India, attracting a vast talent pool seeking better career prospects and a higher standard of living. This demographic contributes significantly to the real estate sector of MMR, driving demand for housing.
• Infrastructure Development: The government’s push for infrastructure development in the MMR is another major driver. Improved connectivity through new highways, metro lines, and upcoming projects like the Navi Mumbai International Airport, Mumbai Coastal Road Project, and establishment of a new city ‘Third Mumbai’ are enhancing the overall quality of life. This is incentivizing buyers to invest in micro-markets that will benefit from better infrastructure in the future.
• Increased Focus on Homeownership: The pandemic has accentuated the importance of owning rather than renting homes. People seek a sense of security and stability after the uncertainties of recent years. This shift in preferences, combined with a growing middle class aspiring for homeownership, are adding to the demand for residential properties in MMR.
• Fear of Missing Out (FOMO): The consistent property price appreciation in MMR has instilled a fear of missing out (FOMO) among buyers. They believe that delaying purchase will only lead to steeper prices later. This perception, vouchsafed by past trends, is leading them to enter the market even at current high property prices.
• Investment Potential: Real estate in MMR has historically proven to be a high-yield investment. Investors see property as a hedge against inflation and a source of stable rental income. With the expectation of continued economic growth in Mumbai, the potential for capital appreciation also remains high, making MMR an attractive investment proposition.
• Wide Range of Options: The rise of fractional real estate investments is providing alternative investment opportunities for those seeking exposure to the luxury real estate market without directly buying the entire properties.
• A Constantly Evolving Market:  The MMR market is constantly transforming, offering an increasingly wider range of property options. From smaller, affordable apartments to luxurious high-rises, there are options in for budgets and lifestyles. This caters to the diverse needs of today’s homebuyers and is driving the housing boom in MMR.

Also Read: MMR, Bengaluru and NCR emerged as India’s most searched regions for properties in 2023

The post MMR’s Housing Boom Defies Rising Property Prices appeared first on Square Feat India.

Housing prices across the top eight cities in India (Delhi-NCR, MMR, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad) continue to head northwards at 6% YoY amidst robust housing demand and quality launches by top developers. Since the beginning of 2022, housing prices have been on the rise on the back of increased demand seen since last year, paired with rise in input prices. Delhi-NCR saw the highest increase in residential prices at 14% YoY, followed by Kolkata and Ahmedabad with 12% and 11% YoY increase respectively.

New launches have been on the rise since the beginning of the year as the market regains momentum after a hiatus, despite rising interest rates and input costs since the beginning of the year. Overall^[1], unsold inventory rose 3% YoY. Owing to the spike in launches in the past few quarters, around 94% of the unsold inventory in India are under construction. Majority of the cities saw a dip in unsold inventory, with Bengaluru witnessing the steepest decline of 14% YoY, led by higher sales. Only Hyderabad, MMR and Ahmedabad saw an increase in unsold inventory, led by significant new launches. MMR continues to account for the highest share in unsold inventory at 37%, followed by 13% in Delhi- NCR and Pune each.

Harsh Vardhan Patodia, President of CREDAI National stated, “The Real Estate market across the country has witnessed a K-shaped recovery in terms of prices, the consumer sentiment has continued to stay robust as the pandemic reshaped the importance of owning a home rather than renting one. With the festive period expected to continue till the end of this year, we can expect sales to be northbound and the number of unsold inventories to decline as well. While there has been a rise in housing prices in line with the global inflationary trends, the market can expect the prices to continue to rise owing to the robust demand. The industry has embarked towards solidity after a let-up due to the pandemic and should be able to stabilize in H1 of 2023”.

“After uncertainty in the past two years, 2022 has ushered in relative stability and recovery for the residential market across top eight cities. The rise in inflation and hike in input costs have put upward pressure on housing prices pan India. Several developers have launched projects and offered rebates during the festive period. While residential activities continue to remain strong, recessionary pressures may have an impact on the salaried class, who form a notable share in homebuying in the top Indian cities,” said Ramesh Nair, Chief Executive Officer | India & Managing Director, Market Development | Asia, Colliers.

“The aggregated sales of three-quarters of CY22 are 16% higher than the aggregate similar three quatres sales of CY 21. Despite increasing interest rates and marginal property prices, there is still a parity between the prices and affordability; sales volumes are likely to stay strong. The year 2022 is slated to pose highest ever sales in the residential market in India, said Pankaj Kapoor, Managing Director, Liases Foras”.

Pan India residential prices Q3 2022 (in INR/sq ft) –

Delhi-NCR continues to witness highest price appreciation during Q3 2022, at 14% YoY

Housing prices in Delhi-NCR have witnessed an uptick since September 2020. Delhi NCR saw the highest increase in housing price across pan India at 14% YoY. Golf Course Road saw the highest price rise of 21%, followed by Ghaziabad. The unsold inventory in the city dropped by 11% YoY during Q3 2022.

Unsold inventory rose 21% YoY in MMR region, while housing prices continue to remain stable

MMR, with the rise in significant new launches, witnessed a rise in unsold inventory for the fifth quarter in a row. Unsold inventory rose 21% YoY in the region, while housing prices continue to remain rangebound with a slight dip of 1% on a quarterly basis. However, Western Suburbs (beyond Dahisar) saw the highest increase in prices at 10% YoY followed by Panvel with 8% increase YoY.

Bengaluru witnessed a steepest decline in unsold inventory, at 14% YoY

While housing prices in Bengaluru increased 6% YoY after remaining rangebound for the last two years, unsold inventory witnessed a sharp decline during Q3 2022, dropping by 14% YoY. Amidst high inclination towards homeownership and higher disposable income, demand for large spaces and self-sustained properties is rising. During Q3 2022, unsold inventory dropped 34% compared with Q3 2019 levels.

Also Read: MAHA GOVT FORMS COMMITTEE TO STREAMLINE REAL ESTATE IN NAVI MUMBAI

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