BUSINESS

Ten lakh unsold homes remain in the top eight Indian cities, with housing prices rising 10% year over year

The first quarter of 2024 saw an annual increase in average house prices of 10%, with a persistently strong mood in residential real estate. The average price of housing increased by double digits in Bengaluru, Delhi NCR, Ahmedabad, and Pune, but it increased annually in all eight of the top cities.

Additionally, most cities’ home prices increased by a notable 2-7% on a quarterly basis.

Even though the market was still favorable for developers as well as purchasers, unsold inventory increased by only 3% year over year in India.

Pune stood out as the city with the largest YoY decrease in unsold inventory at 10%, with Delhi NCR and Ahmedabad following closely behind with 8% yearly reductions apiece.

As of Q1 2024, almost 10 lakh units of unsold inventory were held in the top eight cities, with MMR accounting for almost 40% of this total. It’s interesting to note that every quarter, strong demand momentum caused a slight decrease in unsold units.

While unsold inventories increased annually in Bengaluru and Hyderabad, there was a little quarterly decline in both cities. When planning the date of their next releases, developers will probably be closely monitoring supply levels and projected demand.

The president of CREDAI National, Boman Irani, stated: “The strong demand for homes that we’re seeing nationwide, particularly for premium and luxury properties, is directly responsible for the increase in housing prices. These have a direct bearing on the development of numerous micromarkets that have greatly benefited from large infrastructure projects, in addition to a stable lending environment. This has changed the dynamics of supply and demand in residential real estate, and we do not anticipate this momentum slowing down in FY24/25.

In the first quarter of 2024, residential real estate in India benefited further from optimistic emotions, with average house prices rising by a remarkable 10% annually. The robustness and vitality of the residential sector, supported by variables like steady repo rates and infrastructural improvements in the majority of the main Indian cities, are reflected in this increasing trend. The CEO of Colliers, India, Badal Yagnik, said, “Affordability can improve in the near term, especially for EMI-dependent home buyers, with prospects of a reduction in benchmark lending rates in the ongoing fiscal year.”

Out of the top eight cities, Bengaluru had the highest price increase.

Of India’s top eight cities, Bengaluru had the biggest yearly price increase, with prices rising by 19%.

“With a 19% increase in housing costs, Bengaluru leads the way, with notable price increases in Delhi NCR, Hyderabad, and Pune following. These increases are driven by factors such as key launches, planned infrastructure projects, and luxury demand. The real estate industry is anticipated to sustain demand because of affordability, even in the face of modest inflation and interest rates. According to Pankaj Kapoor, MD of Liases Foras, “the prices could rise by 10-15%, bridging the gap between affordability and inflation-adjusted prices.”

The micromarkets in Bengaluru’s Periphery and Outer East had the greatest growth, rising 32% YoY. The Periphery and Outer North, with an average yearly gain in house prices of 18%, came next. There was a noticeable demand for large apartments in major IT districts like Whitefield and KR Puram, especially for 3BHK and 4BHK layouts.

The average capital value of homes in Delhi NCR increased by 23%, while Dwarka Expressway experienced the largest yearly growth in home prices at 16%. The pattern is probably going to persist in residential catchment areas along the Dwarka Expressway until 2024, given the large number of new launches.

Pune’s unsold inventory had the biggest decline, falling 10% YoY.

Pune saw the sharpest decline in unsold inventory levels among the eight main cities. The 10% year-over-year decrease in unsold homes is indicative of the city’s robust housing demand. The decline in unsold units is accompanied by a significant yearly increase in average home prices of 13%. The high-end and luxury markets had significant launches that were the primary cause of this price increase.

Notable areas such as Camp and Baner had notable year-over-year price hikes of 20–23%. Moving forward, regions like Baner, Chinchwad, Shivaji Nagar, and Nagar Road are probably going to see a lot of residential activity in the short to mid-term due to the completion of major Grade A commercial complexes and the continuous work on important infrastructural projects like Metro Line 3 and Pune Ring Road.

“Over the last several quarters, demand for housing units has been strong across all categories, with the luxury and ultra-luxury sectors seeing the most demand. Bengaluru “promises to be a fast-emerging city in terms of wealth accumulation and growth in the millionaire population,” according to Vimal Nadar, senior director and head of research at Colliers India. Mumbai and Delhi have consistently appeared on the worldwide list of cities with the highest number of millionaires.

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