Housing price rise would be subdued at around 5% in FY25, due to the base effect and large amount of new launches planned, said a report by India Ratings & Research.
Residential prices have moved up 22% y-o-y at the start of FY24 and would be subdued at around 5% y-o-y for FY25, the rating firm said.
With most of the old stock cleared and existing inventory largely liquidated along with a continued pick up in demand and spike in commodity prices due to geopolitical tensions, prices surged by almost 14% y-o-y in FY23, along with an increase in land prices and rental yields, it said.
India Ratings has maintained a neutral outlook for the residential real estate sector for FY25. Absorption and prices are likely to be supported by affordability and stability of interest rates. However, given the high base of FY24, the growth rates are likely to taper down, it said.
The residential real estate market registered a strong performance in 9MFY24, where the sales growth exceeded 25% y-o-y for the top eight real estate clusters, despite price increases and sticky interest rates.
“With most regions witnessing a surge in prices, Ind-Ratings expects the pre-sales growth to moderate to 8% to 10% y-o-y in FY25. Inventory levels have also risen over FY24 in the premium and luxury segment, as launches increased, encouraged by the sharp rise in sales and realisations,” said Mahaveer Shankarlal Jain, director, corporate ratings, India Ratings.
India Ratings expects the mid-income and upper mid-income segments, which emerged as the leading consumer segments in 9MFY24 , forming 30% and 28% of the overall home sales respectively, to continue to witness a strong buyer interest.
While the premium and luxury segments witnessed a sharp demand growth in 9MFY24, it expects the segments to cool down due to the high base, as the unsold inventory levels remain elevated and are the highest over the past five years, it said.
