Prices of residential property have increased by 7% on an average across top eight Indian cities between January and March 2022, according to a study by PropTiger.com. The increase in rates is primarily attributed to hike in prices of building materials.
The country’s top two most expensive real estate markets — Mumbai and Delhi & NCR — have seen the lowest increase of 4% in the weighted average prices, while the maximum increase has happened in Chennai at 9%. Pune and Ahmedabad followed the southern market closely in terms of price increase, with both markets witnessing an 8% rise in their average property rates.
However, record low home loan interest rates, along with several incentives given by the state governments, including reduced stamp duty rates resulted in a continued surge in residential sales. The rise in demand also led to higher supply coming into the market, with a good number of new projects launched during the first three months of the year.
There were 70,623 units sold in January-March as compared to 66,176 units in the same period last year, registering a year-on-year growth of 7% during the quarter.
The demand for housing units priced in the range of Rs 45-75 lakh was the highest. Mumbai and Pune had the biggest share in housing sales, with their combined share at 56% in the overall sales. Interestingly, despite a large section of potential homebuyers preferring to buy a ready-to-move-in property, 79% of the sales during the quarter ended in March was seen in the under-construction category.
The improvement in terms of new supply was also significantly higher during the quarter, with a y-o-y growth of 50% registered in new launches. However, this was heavily driven by Mumbai Metropolitan Region (MMR), which witnessed a near 3x jump in the number of new launches, while half of the cities surveyed showed a decline in the number of new launches. A total of 79,532 units were launched in Q1 2022 across India as compared to 53,037 units in the corresponding period last year.
As activity in housing supply picked up pace, housing inventory swelled slightly, at an annual rate of 4%. Builders in India are sitting on an unsold stock consisting of 7,35,852 units as on March 31, 2022. This number stood at 7,05,344 units at the end of March 2021. With an individual share of 35% and 16%, respectively, Mumbai and Pune continue to contribute the most to this national housing inventory.
However, inventory overhang — the estimated period builders are likely to take to sell off their unsold stock — has declined to 42 months as against 47 months a year ago, primarily because of higher demand for housing. Delhi NCR has the highest inventory overhang while Bangalore and Kolkata have the lowest.
