Real estate market: rising house prices due to strong demand; Mumbai and Bangalore lead with a 9% increase

Property markets across India are witnessing residential price appreciation backed by a surge in sales due to rising awareness of housing need among buyers, falling interest rates and a rapid rebound economic activities after the waves of the Covid19 pandemic.

House prices increased year-on-year during the first half of 2022 in all markets for the first time since the second half of 2015.

In the first half of the year to June, house prices rose in the 8 major markets within a range of 3% to 9% from a year ago, with some of the larger markets registering increases. notable growth. While Mumbai and Bangalore led the rise in prices with a rise of 9% each, the National Capital Region and Pune recorded an increase of 7% each, according to data from Knight Frank India.

“Home buying has rebounded strongly since the onset of the pandemic and is continuing despite inflation concerns in the economy. The interest rate cycle that turned around during this period has had an impact on affordability, but the performance of the economy as a whole and changing buyer perceptions had a greater impact on market dynamics for the remainder of the year as they dictate levels revenue and buyer demand much more directly,” said Shishir Baijal, CMD, Knight Frank India.

With sales of 158,705 units, the first half of 2022 saw the highest sales volume since the second half of 2013 for a half-year period. Sales recorded 60% annual growth in the first half of 2022.

“Improving economic confidence, healthy income growth, the now waning pandemic that has spurred the need to own a home, have all worked in favor of home sales. Despite the two successive rate hikes by the RBI towards the end of the first half of the year, interest rates are still lower than before. Input cost pressures have been there, but the market has absorbed them well, which is reflected in both sales and price growth,” said Ramesh Ranganathan, CEO of K Raheja Corp Homes.

The robust volume of sales has significantly increased property prices in all markets. were the main drivers of this growth.

Developers also strategically responded to demand dynamics and shifting sentiment, and launched 160,806 units in the first half of 2022, up 56%. This is an 8-year high in terms of launches for any semi-annual period.

Despite a higher number of launches, strong growth in sales velocity led to a slight drop in unsold inventory, the level of which fell slightly to 440,117 units at the end of June and also brought back the level of quarters for sale ( QTS) at 7.8 quarters against 10.9 quarters. one year ago.

Mumbai, Delhi-NCR and Bangalore contributed the most to business activity. The nation’s financial capital’s sales volume of 44,200 homes accounted for 28% of total sales among the top 8 cities, the highest of any market.

In terms of annual percentage increase, NCR saw a 154% increase with a sales volume of 29,101 units. In addition to being the biggest mover, NCR had the second-largest share of sales among the country’s eight markets.

Bangalore recorded a similar strong performance with annual sales growth of 80% in the first half of 2022 to 26,667 units, increased hiring and steady revenue growth in the market dominated by the IT sector ( TI), also boosted demand from homebuyers.

The share of sales of homes costing more than Rs 1 crore and above rose to account for 25% of sales in the first half of 2022, from 20% a year ago. This can be attributed to homebuyers’ need to upgrade to larger living spaces with better amenities, and the fact that pandemic-induced income disruptions have not impacted higher income categories. brought up as they did for others.

On the contrary, the share of homes in the Rs 50 lakhs-Rs 1 crore category fell to 34% from 39% a year ago. The Rs 50 lakhs and below category fell slightly to 40% from 42%.

On office market performance, all of the top eight cities recorded transactions of 25.3 million square feet in the first half of 2022, while office completions were recorded at 24.1 million square feet in during the same period.

The Bangalore and Pune office markets saw peak annual growth in rental value at 13% and 8%, respectively, due to higher demand. Hyderabad, Mumbai and NCR also saw a moderate increase in their rental values ​​while rental values ​​in Chennai, Ahmedabad and Kolkata remained stable.

Penny D. Jackson