Indians are buying houses like there’s no tomorrow and this is leading to a sharp increase in residential real estate prices, said a report by Incred Equities based on numbers for the July-September quarter.
According to the report, housing sales in India’s top eight cities zoomed by 36% during the quarter to a whopping 1.2 lakh units.
This is the first time housing sales have gone above the 1 lakh/quarter mark. In the preceding, April-June quarter, sales was at just around 80,000.
In fact, since the COVID pandemic began, the quarterly housing sales have never crossed the 90,000 mark. Before the pandemic, housing sales had seen a high of around 93,000 mark in Oct-Dec 2019.
Demand is being driven by metropolitan cities such as Mumbai and Bangalore, despite higher prices, they pointed out.
In a continuation of the trend that began after the pandemic, growth was led by the higher price brackets.
“..the growth in sales of the premium segment remains significantly higher compared to that of other segments. It grew by 30+% qoq in the Sep 2023 quarter as against a flattish trend in the most affordable housing segment,” Incred said.
One of the possible reasons for the sharp rise in premium segment may be that higher prices are pushing the properties which earlier belonged to the affordable housing segment to the premium segment, the analysts pointed out.
Supply & Demand
Even as demand jumped, there has been no commensurate increase in supply, resulting in higher prices.
Incred pointed out that new project announcements collapsed during the quarter.
As a result, while sales increased by 36%, supply increased by only 24% year on year.
“On the back of robust demand, there is an increase in residential prices across
the bigger residential markets. Bengaluru witnessed the maximum appreciation in prices..followed by Mumbai at around 10%,” it said.
Still, said the analysts, the drop in new project announcements seemed temporary and is likely to recover in the second half of the financial year.