Indian Housing Market Booms with Steady Price Growth

The residential real estate market in major Indian cities is performing well, supported by positive feelings among homebuyers and steady demand. A joint study by CREDAI, Colliers, and Liases Foras revealed that housing prices in the top eight cities in India rose by 3% in the June quarter, continuing a trend of steady growth for the fourth quarter in a row. In the last year, housing prices on average have increased by 12%. Delhi-NCR saw the highest yearly price increase at 30%, with Bengaluru following.

Despite the rise in prices, the overall number of unsold homes has remained stable on a yearly basis, with a slight decrease in unsold homes from the previous quarter due to strong sales. Kolkata had the largest drop in unsold inventory, with a 5% decline, followed by Pune with a 3% decrease. As of the end of June, over 1 million housing units were available for sale across the primary markets in these eight cities, with the Mumbai Metropolitan Region (MMR) accounting for almost 40% of the total unsold inventory. While the number of unsold units in Hyderabad and Bengaluru increased over time, there was a slight decline in these cities on a quarterly basis.

As the festive season approaches, real estate developers are expected to be careful with new project launches and managing their existing housing stock, especially in key residential areas. President of CREDAI National, Boman Irani, noted that the Indian real estate market has been in a strong phase recently. This growth is shown not only by the high number of transactions but also by the positive sentiment towards real estate as a preferred investment option. He mentioned that this has directly impacted housing prices, indicating strong demand and a shift towards real estate as an asset class. He expects this trend to continue, especially with the upcoming festive season, the government’s focus on infrastructure, and a stable lending environment. These factors could further affect housing prices and unsold inventory levels.

CEO of Colliers India, Badal Yagnik, highlighted that demand for housing has remained strong in recent quarters. He attributed this to stable interest rates and supportive budget measures, which have boosted the housing market. He noted that average housing prices have consistently grown at a double-digit rate annually, with a 12% increase in the second quarter of 2024. Yagnik is optimistic about a strong performance for the housing market in 2024, particularly with the festive season expected to boost sales and new project launches.

Pankaj Kapoor, Managing Director of Liases Foras, observed that housing sales in Indian cities have continued to grow despite rising prices. The current quarter also saw a significant 33% increase in new launches in the affordable housing segment. The growth in sales and new launches in the NCR region suggests that the market will likely continue to expand.
Delhi-NCR leading with a 16% rise in housing prices, among the eight cities from the previous quarter. Bengaluru also experienced significant price growth, with average housing prices crossing Rs 11,000 per square foot during the quarter, marking an 8% increase from the previous quarter.

Excluding the Mumbai Metropolitan Region (MMR), all the cities reviewed experienced a decrease in unsold inventory levels of up to 5% on a quarterly basis. Although MMR saw strong sales during the period, a significant number of new project launches led to a slight increase in unsold units. On an annual basis, Pune saw the largest drop in unsold inventory, with a 13% decrease. Other cities like Ahmedabad, Chennai, and Kolkata also saw significant annual declines in unsold inventory, ranging from 6% to 8%.

Overall, the residential real estate market in major Indian cities is expected to maintain its growth momentum, driven by strong demand, positive buyer sentiment, and the upcoming festive season, which is likely to boost sales and new project launches.

The image added is for representation purposes only