Under Construction Home Prices on Upswing

With aggregate residential demand, particularly demand for 2BHK units clocking a substantial increase, the prices of under-construction homes are in the surging mode.  

A recent  PropIndex report by Magicbricks reveals that in  2023, residential prices increased consistently, making relatively affordable under-construction properties more attractive for investment and home ownership.

The report underscores a notable surge in demand for under-construction properties, increasing 7.8 percent  QoQ between January and March 2024. As a result, prices experienced a corresponding uptick, growing 1.7 percent  QoQ and a significant 30.6 percent  YoY. This momentum follows a previous increase of 6.32 percent  QoQ recorded between October and December 2023, indicating a sustained positive trend in the market.

Cities such as Noida (7.1 percent QoQ), Greater Noida (6.1 percent QoQ), Bengaluru and Mumbai (5.7 percent QoQ each) witnessed the most substantial price increments in under-construction properties.

Explaining the trends , Abhishek Bhadra, Head of Research, Magicbricks says, “Historically, homebuyers have often favoured completed projects over new developments. But against the backdrop of increasing residential prices in 2023, there emerged a discernible shift in preference towards relatively more affordable under-construction properties. Consequently, prices of under-construction properties are on the rise as well. In response to this evolving demand, we have observed that developers are swiftly expediting the completion of under-construction projects and launching new ones.”

Furthermore, the report shed light on a notable trend towards 2BHK units, also likely influenced by the increasing residential prices across various cities. According to Magicbricks, the demand share of 2BHK units increased from 32 percent (between October and December 2023) to 42 percent (between January and March 2024).

This trend was particularly pronounced in cities such as Bengaluru (rising from 29 percent  to 45 percent), Noida (increasing from 11percent  to 33percent ), and Navi Mumbai (from 18 percent  to 54 percent) where demand for 2BHKs grew considerably during these respective periods.

The report highlights a continued uptrend in aggregate demand across the top 13 cities between January and March 2024, registering a robust growth of 6.9 percent QoQ. Moreover, after a period of relatively subdued supply, there has been a modest 0.9 percent  QoQ increase this quarter. Despite this, the demand continues to outstrip supply, resulting in a 2.9 percent QoQ increase in residential prices across these 13 cities. Noida (7.4 percent  QoQ), Greater Noida (7.2 percent  QoQ), and Chennai (5.5 percent QoQ) recorded the highest appreciation in property prices.

” While we anticipate residential demand to continue increasing, albeit at a slower pace, there are promising signs indicating an increase in residential supply in the upcoming quarters. Consequently, we expect prices to stabilize, showcasing the market’s resilience in the face of evolving dynamics”.