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According to the first edition of the Housing Price-Tracker report, jointly conducted by Credai, Colliers, and Liases Foras, a pick-up in housing demand across most cities and skyrocketing raw material prices for almost two years led to YoY increases in housing prices, surpassing pre-covid levels across all 8 metro cities (Delhi, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad).
According to the report, after a prolonged slowdown, average residential prices in India rose 4% YoY in Q1 2022, indicating that the residential market is on the mend. While the highest YoY change was seen in Delhi-NCR, with a notable 11.3 percent increase in housing prices, prices in Bengaluru and MMR remained largely stable. However, prices in New Mumbai and the western suburbs (beyond Dahisar) increased by 9-10% year on year. Additionally, overall unsold inventory decreased by 1% across the country as demand improved for 7 consecutive quarters, owing to low loan rates and largely stable prices, despite price increases in all 8 cities.
Hyderabad and Ahmedabad also saw significant YoY price increases of 9% and 8%, respectively, while Delhi-NCR topped the charts in this regard. Kolkata saw a 6% increase in prices year over year, while Pune saw a 3% increase. MMR, on the other hand, had the highest percentage of unsold inventory, followed by Delhi-NCR and Pune.
“Price hikes have been an ongoing issue,” said Harsh Vardhan Patodia, president of Credai National, “but we are pleased with the finance minister’s and government’s intervention to control the rise in the cost of raw materials and, in turn, control inflation, as the Indian economy has remained resilient while grappling with the strains of cost inflation of raw material prices in the last 18 months.” Import duties on steel products, iron ore, and steel intermediaries will be reduced, providing a breakthrough in bolstering domestic raw material availability, cooling steel product prices, and helping to tide the rise in project prices, boosting consumer sentiment. Lowering customs duties on coal products will help cement manufacturers even more.
“Going forward, we recommend the state government reduce state fuel duties as well to have a direct impact on inflation,” he said. Credai sincerely hopes that the price reductions will be passed on to consumers. This will aid real estate developers in avoiding rising construction costs over the last two years, which will only benefit potential homebuyers.”
“After so many years, it’s exciting to see India’s residential market performing well and exceeding market expectations.” End-users have faith in the market, and we expect more sales from credible developers this year as end-users become more discerning about the developer’s reputation. Prices in most markets could rise by 5-10% in the next 6-9 months. In addition to the affordable segment, we are seeing more activity in the high-end segment,” said Ramesh Nair, Colliers’ CEO for India and MD for market development in Asia.
Bengaluru had the highest YoY decrease in unsold inventory in Q1 2022, at 23 percent. The pandemic saw technology companies and startups perform well, which increased residential demand in the technology-driven city. For more than a year, the city’s prices have been stable.
Following Bengaluru, Kolkata and Pune saw the next steep drop in unsold inventory, with YoY decreases of 15% and 11%, indicating a demand recovery. Unsold inventory, on the other hand, increased by 41% year over year in Hyderabad. An increase in new product launches in the city has resulted in an increase in unsold inventory. The majority of the unsold inventory was found in projects that were still in the planning stages.
MMR, which has the most unsold inventory at 32%, has seen stable unsold inventory over the last year. Stable unsold inventory signals a revival in market demand at a time when the region has seen significant new launches. In terms of unsold inventory, the central suburb extension accounts for 26% of the total, with the majority of it priced between INR5,000 and INR7,500 per square foot.
“In the January-March quarter of 2022, new launches returned to pre-covid levels. The number of new launches is expected to increase in the coming quarters. Volumes will improve as a result of the new supply. Thus, despite the recent increase in interest rates, sales will continue to grow,” concluded Pankaj Kapoor, MD, Liases Foras.
