Home sales slip in Bengaluru & Mumbai in Q1 2023 even as prices rise across markets: Knight Frank

• Sales volumes remained steady in the first quarter of 2023, while prices increased significantly in most markets.
  
• Homebuyers are now more willing to purchase newly-launched properties at relatively lower prices.
  
• The percentage of home sales falling in the ₹50 lakh to ₹1 crore category has increased from 35% in Q1 2022 to 38% in Q1 2023.

The residential market has started the year 2023 on a solid footing, with sales of 79,126 units in the first quarter (January to March), indicating a year-on-year (YoY) increase of 1%. There wasn't much fluctuation in sales volumes across most markets when compared to the same period last year, reveals the India Real Estate report by real estate consultancy Knight Frank.

The report also finds that in Q1 2023, the supply levels in the residential market were significantly higher – 87,299 units were launched, marking a 12% increase compared to the same period last year. Developers have continued to take advantage of the steady demand from homebuyers and launched new projects that cater to their modern needs.

Says Pradeep Aggarwal, founder and chairman, Signature Global (India) “Despite several challenges such as increasing input costs and rising home loan interest rates, the demand for housing has remained strong and uninterrupted. This highlights the improved affordability of homebuyers and a shift in mindset towards considering long-term factors over short-term fluctuations.It is encouraging to see that homebuyers are not making hasty decisions based on short-term factors and are instead looking at the bigger picture.”

Sales slip in Bengaluru and Mumbai, grow in Hyderabad

Sales showed a decline in the larger markets of Bengaluru and Mumbai, at -6% and -2% respectively. However, it grew in Hyderabad at 19%. In Chennai, NCR and Pune, it registered a growth of 8%, 2% and 1% respectively, while it slowed down by 3% in Kolkata.

Prices have grown significantly across most markets

Prices of residential properties have increased significantly in most markets. Bengaluru, Mumbai, and the National Capital Region (NCR), for instance, experienced YoY growth in prices of 7%, 6%, and 3%, respectively. This marks the fifth consecutive quarter of YoY growth in prices across all markets. Even on a sequential basis, prices have either remained steady or increased across markets during the quarter.

Homebuyers now more willing to purchase newly-launched properties

Earlier, homebuyers preferred to purchase ready or nearly-completed inventory to reduce the risk of unfinished projects. However, due to increased demand over the past few quarters, the supply of older inventory has diminished, and buyers are now more willing to purchase newly- launched properties at relatively lower prices. This is evident from the decrease in the average age of inventory from 16.9 quarters in the year-ago period to 16.7 quarters in Q1 2023.

Properties worth ₹50 lakh or more make up bigger share of sales pie

The share of home sales in the ₹1 crore and above ticket-size has continued to increase over the past three quarters, reaching 29% in Q1 2023, up from 25% a year ago. This trend can be attributed to the need of homebuyers to upgrade to larger living spaces with better amenities.

Following a similar growth trajectory, the percentage of home sales falling in the ₹50 lakh to ₹1 crore category has risen from 35% in Q1 2022 to 38% in Q1 2023. However, the share of home sales in the ₹50 lakh and below category has decreased from 41% in Q1 2022 to 32% in Q1 2023. This can be attributed to the rising prices and a relatively more negative impact of the pandemic on homebuyers in this segment, leading to a decrease in demand. It is noteworthy that the mid-size segment now accounts for a larger portion of the sales pie than the ₹50 lakh and below category.

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