Indian Housing Market Sees 7% Year-On-Year Surge In Prices, Fueled By Strong Demand And Stable Rates

New Delhi, 9th August 2023: Housing prices in the leading eight cities of India witnessed a year-on-year increase of 7 per cent, driven by strong demand for housing, positive sentiments among homebuyers, and stable interest rates. This information comes from a collaborative report by CREDAI, Colliers, and Liases Foras.

Among these cities, Kolkata saw the most substantial surge in residential prices, rising by 15 per cent year-on-year. Following closely were Delhi-NCR and Hyderabad with increases of 14 per cent and 13 per cent respectively, as detailed in the report named ‘Housing Price-Tracker Report Q2 2023’.

The report highlighted the continuous desire for homeownership, consistent interest rates, and growing disposable incomes as the driving forces behind the steady growth in housing demand, even in the face of global economic challenges. Boman Irani, the president of CREDAI-National, expressed that the current surge in sales across the country reflects favourable sentiments among homebuyers, buoyed by a conducive market environment. Despite price escalations, this trend is anticipated to persist throughout the fiscal year due to stabilized lending rates.

The upcoming festive season is also anticipated to provide an additional boost to sales and sustain the positive momentum into early 2024. The report also pointed out that alongside increased sales, there has been heightened activity in new housing project launches in the top markets in recent quarters. This has led to a 13 per cent year-on-year growth in unsold inventory across India. However, Delhi-NCR bucked this trend with a 7 per cent decrease in unsold inventory, indicating a consistent market recovery.

With the growing demand for more spacious residences, developers have been launching high-end projects, pushing the prices of under-construction units upwards in markets like Kolkata, Hyderabad, Delhi-NCR, and Bengaluru.

Peush Jain, the Managing Director (Occupier Services) of Colliers India, noted that housing prices have displayed a consistent upward trend for the past 10 quarters. With the stability of the repo rate since February 2023 at 6.5 per cent, positive homebuyer sentiments have been maintained due to clear visibility on monthly EMIs.

Despite challenges related to increased construction costs, housing demand remains unwavering. Anticipated is a heightened surge in housing demand over the upcoming quarters, driven by the impending festive season and the persistent inclination towards homeownership.

Vimal Nadar, Senior Director and Head of Research at Colliers India attributed the surge in housing demand across Indian cities to improved infrastructure, enhanced connectivity, rising disposable income, and government incentives. While most cities saw double-digit price increases in Q2 2023, Delhi-NCR has consistently witnessed a price uptick for the past 12 quarters.

Newly developed projects like the Dwarka Expressway and the upcoming 50 km six-lane highway in Delhi-NCR are projected to further boost demand in Gurugram, Ghaziabad, and Noida. Among other major cities, significant micro-markets in Mumbai Metropolitan Region (MMR) experienced a price rise of 3-5 per cent year-on-year.

In Q2 2023, Kolkata experienced the highest year-on-year rise of 15 per cent in housing prices among the top-eight Indian cities. This increase was attributed to rising demand, fueled by positive government incentives like the extension of a 2 per cent reduction in stamp duty and a 10 per cent reduction in circle rates until September 2023.

During the same period, Delhi-NCR observed a 14 per cent year-on-year increase in housing prices. Notably, the micro-markets of Golf Course Road and Dwarka Expressway witnessed the most substantial price hikes, at 46 per cent and 40 per cent respectively on a year-on-year basis.

The housing prices on Golf Course Road continued to surpass those of Delhi in Q2 2023 due to improved connectivity and proximity to commercial office hubs in Gurugram, which spurred demand for residential properties.

Pankaj Kapoor, Managing Director of Liases Foras, mentioned that the housing market’s prudence and discipline have been maintained thanks to a high number of new launches over the past year, leading to a continuous momentum. The increased supply has kept price rises moderate and productive, attracting both end-users and long-term investors. He anticipated that sales will continue to grow due to the maintained affordability and price parity.