Healthy Demand Push Housing Prices

On  the back of healthy residential  demand, prices across the top 8 cities of Delhi-NCR, MMR, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad have seen 5 percent increase in property prices, with Delhi- NCR registering highest increase at 10 percent year on year amidst  a marginal decline in unsold inventory during Q2 2022. 

 Residential prices, which have surpassed pre-pandemic levels, have been seeing an upward trend, led by rising demand amidst increasing prices of construction materials. Delhi-NCR saw the highest increase in residential prices at 10% YoY, followed by Ahmedabad and Hyderabad with 9% and 8% YoY increase respectively. 

According to Credai-Colliers- Liases Foras report, the sales momentum that started in the latter part of last year continued in Q2 2022 as well, led by pent-up demand and attractive pricing. Hence, despite rising prices and an increase in new launches in the last few quarters, unsold inventory saw a dip in the majority of the cities. Bengaluru witnessed the steepest decline of 21% YoY in its inventory overhang, led by higher sales.  Only Hyderabad, MMR and Ahmedabad saw an increase in unsold inventory, which was led by significant new launches. MMR still accounts for the highest share in unsold inventory at 36%, followed by 14% in Delhi- NCR and 13% in Pune. 

Harsh Vardhan Patodia, President , CREDAI National  opines that in view of  the rise in   interest rates due to inflation and increase in housing prices between 2-5 percent across top cities because of elevated material and labour costs, we may see a  marginal dip in demand due to increasing interest rates. However, the sales will continue to grow across segments from September, as we enter the festive season. 

 Rising homeownership amongst millennials supported by higher disposable income and willingness to upgrade to larger spaces equipped with better amenities have sparked a sharp growth in housing demand in the last few quarters. Demand for self-sustained properties replete with best-in-class amenities has also been increasing post-pandemic. These have led to strong growth in housing sales in the last few quarters.  

Ramesh Nair, Chief Executive Officer India and Managing Director, Market Development Asia, Colliers, concurs with Credai President that notwithstanding the rise in lending rates,  the upcoming festive season is likely to keep the market sentiment high resulting in higher sales.  

“ Pankaj Kapoor , Managing Director, Liases Foras expects the prices  to remain range bound as with discounted EMI schemes, there are early signs of developers absorbing the impact of increasing interest rates. This will improve sales volumes especially  as we see growing new supply with festive offers.  

Pan India Residential Prices Q2 2022  

Source: Liases Foras, Colliers 

* All the prices are based on carpet area 

Over the period of two years prices in Delhi-NCR have been rising. Delhi NCR saw the highest increase in prices across  India at 10% with an average carpet price of INR 7,434/ sq feet in Q2 2022. Golf course Road saw the highest price rise of 21%YoY followed by Noida Expressway. The entire region’s inventory dropped 10% YoY in Q2 2022, as developers focused on offloading older projects. While overall unsold inventory is the lowest in three years, the majority of the unsold inventory is concentrated in Noida Extension and Greater Noida, followed by Ghaziabad. 

MMR, which accounts for the highest unsold inventory at 36% share, saw a 14% rise in unsold inventory in the last year. The rise in unsold inventory was led by significant new launches in the city. Housing prices largely remained range-bound, with a slight rise of 1% YoY. However, western suburbs (beyond Dahisar) saw the highest increase in prices at 12% YoY. Unsold inventory in Central suburb extension accounts for 26%, majority share in the price range of INR 7,500-10,000 per sq ft.  

Bengaluru witnessed a sharp decline in its unsold inventory during Q2 2022, dropping by 21% YoY. Inventory overhang in Bengaluru is continuously falling since the beginning of 2019 and is currently the lowest in the last three years. Almost the entire unsold inventory is in Bengaluru’s peripheral areas. This is owing to the large number of projects being launched in the peripheral areas of the city, due to promising prospects in these locations.