In H1 2023, the National Capital Region (NCR)’s primary residential market witnessed steadfast homebuying demand. However, the conspicuous annual growth in demand and supply parameters in the half yearly periods of 2021 and 2022 due to the pandemic softened during this review period as the market seems to have stabilized, according to Knight Frank India’s flagship half-yearly report — ‘India Real Estate H1 2023’ — which tracks the ongoing developments that have impacted the residential and office segments across the top 8 cities.
This is largely due to the cumulative repo rate hike of 250 basis points since 2022 which did not derail the homebuying spree but played a role in slowing down the upward sales momentum in certain segments. Despite the annual growth rate slowing down, half yearly sales volume in absolute terms closed at a decadal high at 30,114 units.
H1 2023’s residential sales volume represents a 3% YoY growth over H1 2022. Surpassing the previous sales high of H2 2022 has been possible due to two primary reasons: a) a pause in the repo rate hike cycle in 2023 which brought relief to homebuyers, and b) new inventory coming to the market that has been well received by interested buyers. Due to a lack of ready to move in inventory by credible developers, any new inventory introduced by such developers has found takers in the market as it comes out of the shadow of the pandemic. Post pandemic, buyers’ confidence in timely delivery of new projects has been reinstated to some extent. These factors have contributed to making H1 2023 the strongest half yearly period since H1 2013.
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Of the total units sold in H1 2023, Gurugram accounted for more than half the units sold with a 52% share. Noida and Greater Noida cumulatively accounted for a 32% share of the total pie. Ghaziabad accounted for 12% share whereas Delhi and Faridabad accounted for 2% share each.
In contrast to housing sales, new launches moderated from 34,507 units in H2 2022 to 29,738 units in H1 2023. However, on a YoY basis, H1 2023 launch volume surpassed that of H1 2022 by 4%. Though developers continued to launch new projects to meet the latent homebuying demand, many have simultaneously intensified efforts for new land acquisition in preparation for a future
pipeline of projects. NCR’s key peripheral belts are witnessing new launches comprising amenities-rich group housing, independent floors and gated plotted developments which meet the demands of the new age homebuyer. In NCR, Gurugram accounted for a mammoth 82% of the total half yearly launches as its growing peripherals, supported by upcoming infrastructure improvements, have given a major boost to connectivity.
The share of residential products with ticket sizes > INR 10 mn in the total sales volume has consistently surged in NCR since H2 2021. From 37% in H2 2021, the share of this category expanded to 41% in H1 2022. In H2 2022, this ticket size category comprised half of the region’s total sales volume before rising to 65% in H1 2023. In absolute terms also, there has been a gradual expansion in sales for products priced upwards of INR 10 mn. The fact that homebuyers looking at premium residential products largely remained unaffected by the interest rate hike contributed to steady sales for such products. Ownership of spacious and independent homes by high-net-worth individuals and affluent families is driving the homebuying spree for this ticket size category.
However, the sales volume in INR 5-10 mn and <INR 5 mn categories continues to reduce as homebuyers considering purchases for these products are more price sensitive to escalating borrowing costs in the wake of previous repo rate revisions. For the INR 5-10 mn category, the percentage share in total sales volume has declined from 33% in H1 2022 to 22% in H1 2023. For products priced < INR 5 mn, the percentage share has shrunk from 25% to 13% in the same period. In particular, this category has been the hardest hit by the repo rate revisions as the buyer profile for such products usually look at affordable options for home ownership and any changes to lending costs and EMIs hampers their decision-making much sooner.
For the third consecutive half yearly period, an upward price revision in average residential prices across NCR was noted. In H1 2023, the average residential prices rose by 5% YoY over H1 2022. Steady homebuying demand coupled with new inventory launched at higher prices led to this price growth. However, this price rise is less compared to the YoY percentage growth noted in H2 2022 and H1 2022 over previous periods.
The healthy growth in NCR’s residential launches led to a 5% YoY rise in unsold inventory to 100,583 units. A dearth of ready to move in inventory led to many new projects being launched in the market giving a fillip to the available units.