Amidst unwavering homebuyer confidence aided by a favorable interest rate cycle and positive economic outlook, the housing market in India’s top eight cities has experienced a significant surge. According to a joint report by CREDAI, Colliers, and Liases Foras, housing prices have increased by approximately 20% in the last two years from 2021 to 2023.
Strong Demand and Price Surge in Bengaluru, Delhi NCR, and Kolkata
Among these cities, Bengaluru, Delhi NCR, and Kolkata have witnessed the highest rise in average housing prices, soaring by about 30% in 2023 compared to 2021 levels. This robust growth is attributed to the notable uptick in housing demand, particularly in the mid and luxury segments. Despite the rising cost of construction, developers were able to pass on these costs successfully.
Increased Supply and Reduced Inventory
Despite the significant influx of new supply, the unsold inventory in 2021 saw a considerable drop and continued to remain rangebound until the end of 2023. The housing markets across major cities experienced an increase in new property launches in the mid and luxury segments during 2022 and 2023. In cities such as Bengaluru, Hyderabad, Kolkata, MMR, and Pune, the new supply nearly doubled or even tripled in the last two years, reflecting robust activity and improved developer-market sentiment. With upcoming projects from established developers and unchanged repo rates, the residential market is predicted to see sustained growth in the short to medium term.
Bengaluru’s Continued Rise in Housing Prices
Bengaluru noted a significant 31% increase in housing prices during the period of 2021 to 2023. This consistent rise is attributed to the high demand for residential properties near IT-localities such as Whitefield, KR Puram, and Sarjapur. The peripheral and outer East and West sub-markets witnessed the highest price hike of nearly 50-60% in the last two years. Additionally, the city experienced twice as many new property launches in 2023 compared to 2021, with a considerable surge in luxury and ultra-luxury property launches in peripheral areas within the North and East sub-markets, as they emerge as prominent IT hubs.
Steady Increase of Housing Prices in the MMR
Average housing prices in MMR (Mumbai Metropolitan Region) have seen a modest yet steady 2% increase in 2023 compared to 2021 levels. Following the impact of the Covid-19 pandemic, housing prices in MMR declined and remained steady for about three years. However, after a hiatus, prices began to increase in 2023 and approached pre-pandemic levels, indicating market recovery. The sub-market of Panvel experienced a notable surge with a 20% rise in the last two years, followed by Western Suburb beyond Dahisar and Navi Mumbai. The completion of key infrastructure projects such as the Mumbai Trans Harbour Link (MTHL) and the expansion of metro lines have paved the way for increased prices in submarkets surrounding Navi Mumbai and the Western suburbs. With several major upcoming projects on the horizon, it is expected that housing prices will continue to rise in the foreseeable future.
In conclusion, India’s top cities are experiencing a significant surge in housing demand and prices, driven by strong economic growth and increased buyer confidence. Bengaluru, Delhi NCR, and Kolkata have witnessed the highest rise in average housing prices, while supply has kept pace with demand. The market in MMR has shown signs of recovery and is poised for further growth with the completion of crucial infrastructure projects. These developments indicate a sustained boom in India’s residential real estate sector in the coming years.
