Housing prices in top Indian cities witness 11% YoY jump in Q3 2024

Average housing prices in the leading eight markets of India experienced an 11% year-on-year increase, reaching Rs 11,000 per square foot in the third quarter of 2024. This growth was driven by robust demand and favorable market sentiments. Notably, this marks the 15th consecutive quarter of rising average housing prices since 2021. Each of the eight major cities reported an annual increase in housing prices, with Delhi-NCR recording the most significant rise at 32% year-on-year, closely followed by Bengaluru, which saw a 24% year-on-year increase during the same period, according to the Housing Price-Tracker Report Q3 2024, released by CREDAI – Colliers – Liases Foras.

Following two years of record-high sales, the demand momentum in major cities is beginning to stabilize. However, with expectations of robust residential activity in the final quarter, 2024 is poised to conclude on a positive note.

In general, unsold inventory has experienced a quarterly decline for the third consecutive quarter, driven by a strong absorption of housing units. As of the end of September 2024, the unsold inventory totaled over 1 million housing units across the eight principal cities, with the Mumbai Metropolitan Region (MMR) representing the largest share at approximately 40%. Interestingly, while unsold units in Hyderabad experienced a slight decrease on a sequential basis, there was still a notable annual increase of around 28%.

Commenting on this, Boman Irani, President of CREDAI National said, “The ongoing rise in housing prices is another validation of positive homebuyer sentiments and the highly conducive nature of the real estate market. We are seeing more and more aspirational homebuyers come to the fore – resulting in bigger homes that are also being reflected in the rise in prices as homes continue to get more expansive, truly reflecting the current market dynamics and consumer preferences. We expect this robust momentum to continue going into the new year and are hopeful of rate cuts in the impending future.”

“While the housing market is gradually stabilizing, the outlook for the residential segment remains positive supported by strong underlying market fundamentals. Developers are recalibrating their strategies, particularly in the price-sensitive segments, by offering compact size units. Although average housing prices have continued to increase steadily, witnessing a 11% YoY growth during Q3 2024, the likely easing of monetary policy and anticipated repo rate cuts can potentially bring financial relief to homebuyers in the near term. Moreover, flexible payment plans and freebies to attract homebuyers will continue to aid in residential sales momentum,” said Badal Yagnik, Chief Executive Officer, Colliers India.

“Sales and prices continue to grow, suggesting affordability and demand are intact. The luxury segment is still dominant, although we have been seeing a gradual reduction in new launches. While MMR, Pune, and Hyderabad are reaching a plateau in sales and supply, NCR, Chennai, and Tier 2 cities have a deficient supply level; they may see a surge in new launches,” said Pankaj Kapoor, Managing Director, Liases Foras.

Within the top cities, Delhi NCR saw the highest surge in housing prices at 32% YoY

Led by launches of select marquee projects within the luxury & ultra-luxury segment, housing prices in Delhi NCR increased 32% YoY, highest annual rise across the major cities. Within Delhi NCR, Dwarka Expressway and Golf Course Extension/Sohna Road witnessed a significant price appreciation of over 50% YoY, leading to a sharp rise in average housing prices at an overall level. Interestingly, compared to early years of the pandemic in 2020, average housing prices in the region have grown by about 75%, led by healthy traction in the luxury segment and continued demand for larger & spacious dwelling units.

Unsold inventory levels continued to drop for the third consecutive quarter

Although unsold inventory levels remained high, it continued to witness a quarterly drop for the third consecutive quarter. At 13%, Pune saw the highest decline in unsold inventory levels annually. Interestingly, it was the fifth consecutive of drop in inventory levels for the city. Annual decline in unsold inventory levels have been significant in Chennai and Kolkata too with 7-9% drop. Interestingly, 7 out of 8 cities saw a dip in unsold inventory levels, on a quarterly basis.

“With existing high unsold inventory levels to the tune of 10 lakh units across the eight major cities, developers are being cautious with new launches. They are realigning their strategies by assessing and identifying the appropriate target audience in high demand pockets. Although new launches have moderated in the affordable housing segment, developers have stepped up their offerings in luxury and ultra-luxury segments. Average housing prices for spacious dwelling units, particularly 3-4BHK configurations in cities like Bengaluru and Delhi NCR increased by up-to 26% YoY during Q3 2024,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.