Housing prices across the top eight cities (Delhi-NCR, MMR, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad) of India surpassed the pre-pandemic levels during Q2 2022, led by rising demand amidst rising prices of construction materials. Average residential prices across Pan India rose 5% YoY in Q2 2022, according to the Housing Price-Tracker Report 2022 by CREDAI – Colliers – Liases Foras.
Delhi-NCR saw the highest increase in residential prices at 10% YoY, followed by Ahmedabad and Hyderabad with 9% and 8% YoY increase, respectively.
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. About 93% of the total unsold inventories across all the 8 cities in India are under construction units.
Commentig on the same, Harsh Vardhan Patodia, President of CREDAI National, said, “The central bank continues to increase the repo rate to offset the impact of inflation and banks are expected to increase loan interest rates, including that of home loans. As captured in this report, the housing prices have increased between 2% and 5% across cities, as materials and labour costs continue to remain high. We may see a marginal dip in demand due to increasing interest rates, but I am confident that the sales will continue to grow across segments from September, as we enter the festive season.”
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“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. Prices have also seen a 5% rise on YoY basis,” said Ramesh Nair, Chief Executive Officer | India & Managing Director, Market Development | Asia, Colliers.
“RBI has increased the repo rate amidst inflationary pressures and banks have already begun increasing the lending rates. However, the upcoming festive season is likely to keep the market sentiment high resulting in higher sales,” he added.
“Price to remain range-bound. With discounted EMI schemes, we see early signs of developers absorbing the impact of increasing interest rates. Sales volumes are likely to improve as we see growing new supply with festive offers,” said Pankaj Kapoor, Managing Director, Liases Foras.
Delhi-NCR saw the highest YoY change with a 10% surge in residential prices
Over the period of two years, prices in Delhi-NCR have been rising. Delhi NCR saw the highest increase in prices across Pan 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, Noida has the maximum unsold inventory (Noida Extension, Greater Noida), followed by Ghaziabad. About 48% of the unsold inventory fall in the price range of INR 2,500-5,000 per sq ft, of which majority are in Noida Extension.
Unsold inventory in MMR rose 14% YoY, while prices remained range-bound
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.
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Bengaluru sees the steepest drop in unsold inventory at 21% YoY
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.