Property prices and rental yields have gone up significantly across seven major cities in the last five years. The highest jump in property prices in the last 5 years has been seen in Bengaluru and Hyderabad, according to Anarock Research data.
The collective average property price across the seven cities – Delhi NCR, Kolkata, Mumbai Metropolitan Region (MMR), Pune, Hyderabad, Chennai and Bengaluru – in 2022 was Rs 6150 per sqft.
Data shows that the maximum average property price rise of 6% in the last 5 years was seen in 2022. In the previous four years, the average price rise was in the range of 3-4% y-o-y.
Interestingly, property prices soared post-pandemic, before which prices were range-bound due to a prolonged demand slowdown.
Also Read: Mumbai Property Price Calculation 2023
“If we delve deeper and consider the yearly trends in the last five years, it emerges that 2022 saw the maximum yearly rise (6%) in average property prices (INR 5,826 per sq. ft. in 2021 to INR 6,150 per sq. ft. in 2022). The previous four years, on the other hand, saw either no change or a maximum of 3-4% y-o-y increase in 2021 against 2020. Before the Covid-19 pandemic, property prices across cities remained range-bound due to a prolonged demand slowdown,” said Prashant Thakur, Senior Director and Head of Research at Anarock Group.
“Post the pandemic, demand soared across cities – as did developers’ input costs – causing prices to rise, particularly in 2021 and 2022. Another factor driving prices up is the fact that most sales happening now are by branded developers who have not shied away from price hikes on the back of strong demand and rising construction costs,” he added.
Also Read: Key points to know about Certified MahaRERA Real Estate Agents
Highest Price Jump
Bengaluru and Hyderabad have seen a maximum increase of 10% in average property prices in the last five years. Data shows that the average property prices in Bengaluru stood at Rs 4,894 per sq. ft. in 2018 and went up to Rs 5,570 per sq. ft. in 2022. In Hyderabad, the average price in 2018 stood at Rs 4,128 per sq. ft, which increased to Rs 4,620 per sq. ft. in 2022.
City-Wise Average Property Prices in 5 years
| City | 2018 | 2019 | 2020 | 2021 | 2022 |
| NCR | 4,546 | 4,569 | 4,580 | 4,781 | 5,025 |
| Kolkata | 4,415 | 4,378 | 4,385 | 4,512 | 4,700 |
| MMR | 10,497 | 10,595 | 10,610 | 11,092 | 11,875 |
| Pune | 5,455 | 5,495 | 5,510 | 5,733 | 6,000 |
| Hyderabad | 4,128 | 4,185 | 4,195 | 4,372 | 4,620 |
| Chennai | 4,920 | 4,931 | 4,935 | 5,070 | 5,315 |
| Bangalore | 4,894 | 4,961 | 4,975 | 5,217 | 5,570 |
| Total Avg. | 5,551 | 5,588 | 5,599 | 5,826 | 6,150 |
Rental Yield Trends
Rental income witnessed a decline in 2020 as the pandemic pushed work-from-home and e-schooling. However, rental income witnessed some improvement in 2021 and increased further in 2022.
According to Thakur, the current rental demand will remain strong in all cities as urban work opportunities rise and more people migrate to cities.
City-Wise Rental Income Trends
| Cities | Rental Yield (in %) in 2019 | Rental Yield (in %) in 2020 | Rental Yield (in %) in 2021 | Rental Yield (in %) in 2022 |
| Gurgaon | 3.5 | 3.4 | 3.5 | 3.7 |
| Noida | 3.2 | 3 | 3.1 | 3.4 |
| Greater Noida | 2 | 2 | 2.3 | 2.8 |
| Delhi | 2.2 | 2.1 | 2.3 | 2.6 |
| Pune | 3.3 | 3.1 | 3.2 | 3.5 |
| Bangalore | 3.6 | 3.4 | 3.5 | 3.9 |
| Mumbai | 3.5 | 3.3 | 3.5 | 3.8 |
| Navi Mumbai | 2.8 | 2.6 | 2.7 | 3.2 |
| Thane | 2.7 | 2.5 | 2.6 | 2.9 |
What Is Expected in 2023?
It is expected that property prices and rental income trends will remain strong in 2023. However, buyers should avoid under-researched investments and short-term profit goals.
“There is little reason to be pessimistic in the current year, though under-researched investments and a short-term profit perspective must be avoided in 2023,” said Thakur.
Also Read: Investment planning: Diversify your portfolio to reduce volatility
“The RBI will likely take a pause after a spate of interest rate hikes, so growth momentum will continue. 2023 will continue to be driven by end-user demand, but serious long-term investors will find the market dynamics more than favourable. Property prices are likely to rise by another 5-8% in the larger cities – this bodes well for investors focused on capital appreciation, but also means that rental demand will increase,” he added.