Housing prices surged about 20 per cent across the top-8 cities in the past two years between 2021 and 2023 amid unwavering homebuyer confidence aided by a favourable interest rate cycle and positive economic outlook, according to a joint report by CREDAI, Colliers and Liases Foras.
“Bengaluru, Delhi-NCR and Kolkata have witnessed the highest rise in average housing prices at about 30 per cent in 2023 compared to 2021 levels. This robust growth is underpinned by a notable uptick in housing demand, particularly in the mid and luxury segments. Amidst significant new launches, developers were able to successfully pass on the rising cost of construction in most cases,” according to the report.
Overall, the unsold inventory saw a notable drop in 2021 and largely continued to remain rangebound until 2023 end, despite significant influx of new supply. During 2022 and 2023 housing markets across the major cities saw an increase in new property launches, in mid and luxury segments, the report said.
In cities like Bengaluru, Hyderabad, Kolkata, MMR, and Pune new supply surged 2-2.5 times in the last two years, reflecting robust activity and improved developer-market sentiment. With healthy visibility of upcoming projects from established developers and unchanged repo rate, the residential market will see sustained growth in the short to medium term, it said.
Boman Irani, president of CREDAI National, said, “The year-on-year increase in housing prices is a combination of a number of factors – characterised by strong, robust demand from homebuyers – especially for mid and premium segments, along with the existence of a conducive buying eco-system coupled with healthy macro-economic factors, and the rise in prices of construction materials.”
Irani added that the ongoing momentum also encouraged numerous developers that has led to the increase in housing supply across major cities in India. “We expect both, housing demand and supply, to thrust forward in 2024 not only in top 8 cities but in Tier-II and III regions as well.”
Badal Yagnik, chief executive officer of Colliers India, said, “Housing prices continued to reflect strong market momentum and saw a 9 per cent annual rise in 2023. The year outperformed in several areas including uptick in high-end & luxury segments, scaling new peak in sales volume, infrastructure led development, resulting in deeper price discovery across most of the markets.”
Yagnik added that during the year, all the eight major cities witnessed an increase in housing prices, with Bengaluru, highest at 21 per cent YoY, followed by Kolkata at 11 per cent. Looking ahead to 2024, the market is well poised to maintain its current trajectory, with the mid and luxury segments expected to thrive further, offering lucrative opportunities for investors and homebuyers alike.
Bengaluru Sees Heightened Residential Activity During 2021-23
Bengaluru noted a significant 31 per cent increase in housing prices during 2021- 23. The city’s rising streak has been largely consistent over the last two years backed by a noticeable uptick in demand for residential properties near IT localities like Whitefield, KR Puram, and Sarjapur.
Housing Prices in MMR Continue to Rise
Average housing prices in MMR, the most expensive residential market amongst the top eight cities saw a modest yet steady 2 per cent increase during 2023 compared to 2021 levels. Post-Covid-19, housing prices in MMR dipped and were steady henceforth for about three years. After a hiatus, prices increased during 2023 and inched closer to pre-Covid levels indicating recovery in the market.
Vimal Nadar, senior director and head of research, Colliers India, said, “Over the last two years from 2021 to 2023, cities like Delhi-NCR, Chennai and Pune, registered a notable decrease in unsold inventory. While Delhi NCR led the pack with a significant 19 per cent drop, Chennai and Pune followed closely with about 5-10 per cent drop each, during the two-year period.”
Nadar added that with an expected steady rise in income levels coupled with positive market sentiment, the demand momentum is likely to remain strong in these markets.
Pankaj Kapoor, managing director of Liases Foras, said, “The current state of real estate is the most productive when sales, supply, and prices are growing, and the price rise is not speculative. These factors work in harmony in a balanced and healthy real estate market.”
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