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Residential real estate: Key Indian property markets see 5-7% rise in housing prices in March quarter


Residential real estate has continued to witness firm growth in demand and conversion across India’s key property markets during the quarter ended March with a steady rise in prices.

This also marks the fifth consecutive quarter of year-on-year growth in prices across all markets. Even in sequential terms, prices have either remained steady or grown across markets during the quarter.

Prices have grown significantly across most markets led by Bengaluru, Mumbai, Chennai, and Hyderabad with 5-7% appreciation, showed data from Knight Frank India.

The residential market has stepped into 2023 on a stable footing with the first quarter of the year registering sales of 79,126 units, up 1% from a year ago when home loan rates were at record low of 6.6% as against 9% now.

Sales grew the most in the Hyderabad market at 19% from a year ago while slipping slightly in the larger markets of Mumbai and Bengaluru at 6% and 2%.

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“Given the cautious but optimistic sentiment in the market, we do not believe that home loan rates approaching 2019 levels (9.2%) will be enough to subdue market momentum significantly. The performance of the broader economy and homebuyer sentiment will have a greater bearing on market momentum in 2023 as it dictates homebuyer income levels and demands much more directly,” said Shishir Baijal, CMD, Knight Frank India.Consistent with the upward trend seen in the past three quarters, the share of sales in the Rs 1 crore and above ticket-size grew to 29% from 25% a year ago given the homebuyers’ need to upgrade to larger living spaces with better amenities. The share of home sales in the Rs 50 lakh to Rs 1 crore category also grew 38% from 35% a year ago.The share of the Rs 50 lakh and below ticket size, however, deteriorated from 41% a year ago to 32% during the quarter, as rising prices, higher interest rates and a comparatively more adverse impact of the pandemic on homebuyers in this segment continued to weigh on demand.

“Rising interest rates have certainly impacted the sales of rate-sensitive segments of affordable and low-income group housing. The 2.5% increase in repo rate in a short span since last May has increased the homebuyers’ burden. Real estate industry has linkages with over 260 other sectors and therefore impacts the entire economy. We hope that the central bank will take cognizance of this in the upcoming policy meeting,” said Sandeep Runwal, President, NAREDCO – Maharashtra.

Homebuyers have been more inclined to purchase ready or near-ready inventory to minimise completion risk earlier. However, the heightened demand over the past few quarters has depleted the inventory, and consumers are now increasingly willing to acquire newly launched properties at relatively lower prices.

This is reflected in the average age of inventory decreasing to 16.7 quarters during the quarter from 16.9 quarters a year ago.

The unsold inventory level has increased 6% from a year ago as fresh development activity has intensified. However, the Quarters to Sell (QTS) level has dropped to 7.2 quarters as of March end on the back of heightened sales, compared to 9.1 quarters a year ago.

The QTS level represents the number of quarters required for the existing unsold inventory to be consumed at the current rate of sales. A reducing QTS level depicts a market where demand is gathering momentum.

Mumbai recorded sales of 20,300 new homes during the quarter, highest among the top eight markets. While still robust, sales were lower 6% on-year when compared to a strong year ago period when impending metro cess implementation had also bolstered sales.

Besides, Mumbai is the most unaffordable market in India and the recent spate of price increases and rate hikes will be felt more acutely here. However, launches have continued unabated with 9% rise. The prices rose 6% indicating the momentum in the market.

The Delhi-NCR market witnessed stable demand as sales rose marginally 2% to 15,392 units, while launches rose 12% to 14,486 units. The prices have appreciated at a steady pace of 3%.

In Bengaluru, average prices rose 7%, a testimonial to the underlying confidence of the market. The number of units sold reduced marginally by 2% to 13,390 units, while launches were second highest in the top 8 cities at 12,073 units, up 19%.

The resilient Hyderabad market experienced substantial growth despite the rate hikes and concerns around economic slowdown as it saw 19% rise in sales at 8,300 units during the quarter. New launches rose 7% to 10,986 new units, while prices grew 5%.


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