Residential Prices Rise Amidst Robust Demand

The strong housing demand and quality new launches are contributing to the rise in residential prices across top cities.

According to a Housing Price Tracker Report 2022, jointly done by Credai-Colliers- Liases Foras ,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 due to surging housing demand, aided byrising number of new launches by the 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, unsold inventory rose 3% YoY. Owing to the spike in launches in the past few quarters, around 94% of the unsold inventory in India is 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.

According to Harsh Vardhan Patodia, President, Credai National, 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. With the festive period expected to continue till the end of this year,  sales are expected to go northbound and the number of unsold inventories to decline as well.The market can expect the continuous rise in  prices  owing to the robust demand and is expected 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, as per Ramesh Nair , CEO, India & Managing Director,  Market Development Asia, Colliers.

Source: Liases Foras, Colliers

All the prices are based on carpet area in INR/sq ft

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.

MMR, with the rise in significant new launches, witnessed an uptick  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.

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.

According to Pankaj Kapoor,Managing Director , Liases Foras, the aggregated sales of three quarters are 16 percent higher than the aggregated sales of three quarters of CY 21.Despite increasing interest rates and marginal rise in property prices, there is still a parity between property prices and affordability. As such  sales volumes are likely to stay strong. In view of this , the year 2022 is slated to post the highest ever sales of homes.