The residential real estate market in India saw strong momentum, sales hitting a decadal high in 2023 and data indicates that sales in major markets like Mumbai, Pune and Hyderabad have continued to remain strong this year, in part aided by strong demand for homes priced upwards of Rs 1 crore in cities like Mumbai. The sales uptick in these markets comes even as prices have also continued to go up.
According to consultants Knight Frank, home sales rose 9 per cent year-on-year to 86,345 units in the January-March quarter, which was the second highest number in the past six years.
The sales growth was led by Mumbai, which saw sales surge 17 per cent to 23,743 units in the first quarter of the year, compared with 20,300 units sold in the same period a year ago. Another market that saw strong sales uptick was Hyderabad, where 9,550 homes were sold in January-March, up 15 per cent from 8,300 units that were sold in the year ago quarter.
Housing demand also remained strong in Pune, Kolkata and Ahmedabad, where sales rose 14 per cent, 12 per cent and 11 per cent respectively.
However, sales in the National Capital Region saw only a 1 per cent uptick. In January-March, 15,527 homes were sold in the NCR, only slightly higher than the 15,392 homes that were sold a year ago. IT capital Bengaluru, meanwhile, saw sales dip 2 per cent to 13,133 units from 13,390 units in the quarter.
As the demand has been strong, residential real estate prices have continued to go up in these cities. Hyderabad saw prices go up as much as 13 per cent year-on-year. That was followed by a 9 per cent YoY uptick in Bengaluru, 7 per cent in Kolkata, 6 per cent in Mumbai and 5 per cent in NCR and Chennai. Pune and Ahmedabad saw home prices go up 4 per cent and 2 per cent respectively.
"The consistent increase in demand has spurred a rapid pace of residential development, resulting in the number of units launched surpassing sales figures for the last six quarters. A total of 93,254 new residential units were launched in Q1 2024 registering a growth of 7 per cent YoY," said Knight Frank.
Notably, the consulting firm pointed that the fundamental structure of the market has undergone significant changes, with the higher ticket sizes accounting for the majority of sales.
"The residential segment witnessed a significant surge, propelled by continued growth in sales in the higher price category of Rs 1 crore and above. This not only demonstrates a strong demand trajectory but also reflects buyers' confidence in making long-term commitments," said Shishir Baijal, chairman and MD of Knight Frank India.
Homes priced above Rs 1 crore now account for 40 per cent of the total sales, compared with 29 per cent in the year ago quarter.
"The need for larger living spaces and an upgraded lifestyle was sparked during the pandemic continues to fuel demand in this segment. Sales in this segment have grown by 51 per cent YoY and it has been the primary driver for overall sales growth during the quarter," according to Knight Frank.
In contrast, homes priced in the Rs 50 lakh to Rs 1 crore bracket have seen their share in total sales decline to 33 per cent from 38 per cent.
Similarly, share of homes priced below Rs 50 lakh has declined to 27 per cent from 32 per cent. In January-March 2022, this segment had accounted for as much as 41 per cent of the market.
"The combined impact of rising prices, higher home loan rates, and the relatively adverse effects of the pandemic in this sector persisted, suppressing demand," said Knight Frank.
