Increase in the cost of construction coupled with pent-up demand resulted in an appreciation of housing prices by an average 7 per cent during the last year, according to PropTiger.com data.
The average housing prices increased 7 per cent last year across eight major cities to Rs 6,700 – Rs 6,900 per square feet as compared with the 2021 calendar year.
As per the Real Insight report, the rise in prices of residential properties, however, did not impact sales during 2022 because of huge pent-up demand from the previous two years (2020 and 2021), which saw muted customer demand because of the COVID-19 pandemic.
“Housing prices remained by and large stable during the 2016-21 period. The year 2022 saw an appreciation in prices as the rates of key construction materials increased because of global headwinds like the Russia-Ukraine war. Strong revival in demand for both under-construction and ready to move in units also played a role in modest single digit increase in prices,” said Vikas Wadhawan, Group CFO, PropTiger.com, Housing.com & Makaan.com.
“With the increase in the overall construction cost, builders were forced to raise the basic selling price (BSP) of apartments,” Wadhawan added.
Note: All prices as per weighted average prices for new supply and inventory.
Gurugram saw the highest price appreciation of about 13 per cent, Bengaluru and Delhi-NCR, both, witnessed a 9 per cent growth in prices, followed by Pune (8 per cent). Ahmedabad and Kolkata saw 7 per cent appreciation each in housing prices.
According to the data, the housing prices in Ahmedabad went up by an average 7 per cent year-on-year in 2022 to Rs 3,600-Rs 3,800 per square feet.
Southern markets continue to rise while in Bengaluru, the rates appreciated 9 per cent to 6,000-6,200 per square feet. Similarly, Chennai also grew by close to 5 per cent to 5,600-5,800 per square feet. Since Hyderabad has already seen high double-digit growth in the last few years, the market seems to be seeing some plateau in terms of growth rate. Although the realty prices continue to rise in the city of Nawabs and grew by about 4 per cent to Rs 6,100-6,300 per square feet.
In Delhi NCR, the prices of residential properties rose 9 per cent to Rs 4,800-Rs 5,000 per square feet. Among two major markets of Delhi-NCR, Gurugram saw a surge of 13 per cent to Rs 7,000-Rs 7,200 per square feet while Noida witnessed a growth of 7 per cent to Rs. 5,400-Rs 5,600 per square feet.
The prices appreciated by 7 per cent in Kolkata to Rs. 4,600-Rs 4,800 per square feet.
Mumbai saw an increase of 5 per cent in housing prices to Rs 10,100-Rs 10,300 per square feet.
Housing prices in Pune rose 8 per cent to Rs 5,500-Rs 5,700 per square feet in 2022 compared with the previous year.
“We believe that housing prices will continue to grow in single digits during 2023 as demand continues to be strong. The input cost has eased a little bit, especially steel prices, but rates of other materials are still high,” Wadhawan said.
The new supply is largely coming from trusted developers as demand is getting consolidated towards such builders to avoid risks.
“Modest growth in prices is also healthy for the market as it will encourage investors to return to the housing market. In the last 6-7 years, the residential market has been largely dominated by end users but now we expect investors’ interest to rise,” Wadhawan said.
“Price rise primarily propelled by strong end-user demand, residential realty after a lull has also reinstalled investor confidence in the market which is witnessing its much-awaited upcycle. The residential prices have spiked up significantly in key micro markets of Gurugram, Hyderabad, and Bengaluru where we also see a premium being put on the little available (only 21% of the total unsold stock) but much in demand ready-to-move-in segment. Also there is a lot of NRI interest in the market owing to the weakening of the rupee,” said Ankita Sood, Head of Research, PropTiger.com, Housing.com & Makaan.com.
“We anticipate that property prices will continue to move up in the close range in 2023 with quality products attracting a further premium,” added Sood.
Housing markets covered in the report include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Delhi-NCR (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad), Mumbai Metropolitan Region (MMR) and Pune. In the MMR, Mumbai, Navi Mumbai & Thane are included.