The real estate market in India witnessed a significant surge in demand for under-construction properties, driving up residential prices, according to the latest PropIndex report by Magicbricks, the country’s leading real estate platform. The report reveals a 7.8% quarter-on-quarter (QoQ) increase in demand between January and March 2024, resulting in a corresponding 1.7% QoQ growth in prices.
Furthermore, there was a significant 30.6% year-on-year (YoY) increase, demonstrating the sustained positive trend in the market. Cities such as Noida, Greater Noida, Bengaluru, and Mumbai witnessed the most substantial price increments for under-construction properties, with increases of 7.1% QoQ, 6.1% QoQ, 5.7% QoQ respectively. This surge in demand for under-construction properties can be attributed to the rising residential prices seen throughout 2023.
Abhishek Bhadra, Head of Research at Magicbricks, explains, “Historically, homebuyers have favored completed projects over new developments. However, with the increase in residential prices, there has been a noticeable shift in preference towards relatively more affordable under-construction properties. As a result, prices of under-construction properties have also experienced a significant rise.”
Trend Towards 2BHK Units Driven by Rising Residential Prices
The PropIndex report also sheds light on a notable trend towards 2BHK (two-bedroom, hall, and kitchen) units. This preference for 2BHK units is likely influenced by the increasing residential prices across various cities. The demand share of 2BHK units increased from 32% between October and December 2023 to 42% between January and March 2024. This trend was particularly pronounced in cities like Bengaluru, where the demand for 2BHK units rose from 29% to 45%, Noida, which increased from 11% to 33%, and Navi Mumbai, where the demand surged from 18% to 54% during the respective periods.
Expectations of Stabilizing Prices as Residential Supply Rises
While the demand for residential properties is expected to continue increasing, the report suggests a promising signal of increased residential supply in the upcoming quarters. Developers are expediting the completion of under-construction projects and launching new ones to meet the evolving demand. Abhishek Bhadra concludes, “We anticipate prices to stabilize as the market adapts to these evolving dynamics. The resilience of the real estate sector, coupled with the increased supply in the future, will likely address the demand-supply gap and moderate the price appreciation.”
Rise in Demand Outstrips Supply, Pushing Residential Prices Up
The PropIndex report reveals a continued uptrend in aggregate demand across the top 13 cities in India between January and March 2024, registering a robust growth of 6.9% QoQ. Following a period of subdued supply, there has been a modest 0.9% QoQ increase this quarter. However, the demand for residential properties continues to exceed the supply, resulting in a 2.9% QoQ increase in residential prices across these 13 cities. Noida, Greater Noida, and Chennai experienced the highest appreciation in property prices, with increases of 7.4% QoQ, 7.2% QoQ, and 5.5% QoQ, respectively. This imbalance in supply and demand further emphasizes the need for increased residential supply to meet the growing demands of buyers.
In conclusion, the PropIndex report paints a positive but challenging picture of the real estate market in India. As the demand for under-construction properties soars and the preference for 2BHK units increases, residential prices continue to rise. However, with the anticipated rise in residential supply, there is hope for stabilizing prices and addressing the demand-supply gap in the near future.
