Delhi-NCR has recently emerged as the city with the highest surge in residential prices, experiencing a remarkable 16% year-on-year increase, according to a recent survey conducted by CREDAI, Colliers, and Liases Foras. This surge in housing prices is reflective of the overall growth in India’s real estate market, with the top eight cities in the country, including Pune, Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, and the Mumbai Metropolitan Region, witnessing an average 8% rise in housing prices during the first quarter of 2023.
Infrastructure development, particularly in Noida and Gurugram, has played a significant role in the real estate growth of the National Capital Region (NCR). The availability of superior projects in the market, combined with the presence of reliable developers, has further fueled the surge in home sales. This upturn in the market can be attributed to the aspirations of consumers for an enhanced lifestyle, which has motivated developers to introduce new projects that cater to the increasing aspirations of contemporary homebuyers.
Delhi-NCR, Kolkata, and Bengaluru lead the pack with the highest year-on-year increase in residential prices, standing at 16%, 15%, and 14% respectively. The prices mentioned in the survey are based on the carpet area, providing a more accurate representation of the actual living space.
Despite the prevailing higher interest rates, housing prices have shown no signs of abating. The consistent demand observed over the past year has been a key factor contributing to the increase in prices. The report highlights that with interest rates expected to have reached their peak and a pause in the rising repo rate, along with a healthy domestic economic outlook, market sentiment is anticipated to remain positive.
Developers are keen to capitalize on the growing demand, leading to a surge in new project launches across the top eight cities. As a result, the overall unsold inventory has witnessed a 12% year-on-year increase. It is noteworthy that around 95% of the unsold units in these cities are still under construction, indicating the scale of ongoing development activity.
The rise in housing prices can be attributed not only to the consistent demand but also to an increase in construction costs. This upward trend is expected to continue due to consumers’ strong inclination towards purchasing new, larger homes with improved amenities. The pandemic has significantly influenced people’s preferences, emphasizing the desire to own a home rather than rent. Furthermore, the moderation in the last two rate hikes by the RBI has instilled hope that interest rates may have reached their peak.
Despite the increase in prices, labor costs, and the post-pandemic preference for larger homes, Delhi-NCR has witnessed a decline in unsold inventory, which is an encouraging sign. It indicates a positive outlook for future housing sales and presents lucrative opportunities for developers to plan new projects in emerging realty hotspots, fulfilling the housing dreams of prospective buyers.
Regarding the distribution of unsold inventory, the Mumbai Metropolitan Region (MMR) holds the largest share at 37%, followed by Pune at 13%. This suggests that while the demand for housing remains strong, some regions may face challenges in managing their existing inventory.