Housing markets remain strong in 2024, sales rise 20% across six metro cities in Q1

• New projects are selling out on launch day, highlighting the urgency among buyers to secure a property
  
• The average rent increase has been higher than average salary increments across cities, prompting potential home buyers to take the plunge
  
• Those who were initially considering homes in the 60-80 lakh range are now being priced out and are opting for more affordable options.
  

India's major cities are experiencing a housing boom in 2024. Sales have gone up by 20% in the first quarter so far (January 1 to March 15) with nearly 147,000 units sold across Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, and Pune, according to a report by NoBroker, a property search portal.

According to the report, this positive trend is likely to have been led by a combination of factors. The Indian economy is on a strong growth trajectory, and the government's stable economic policies are boosting buyer confidence in the real estate market. People feel secure about investing in property, despite ongoing increases in property prices, according to the report.

Growing aspiration to own than to rent

A clear desire for homeownership is evident, possibly driven by the security and stability that owning a physical asset like a house provides. Additionally, relatively affordable home loan interest rates, currently ranging between 8.30% and 11.15% per annum, are further greasing the wheels of the housing market.

Says Amit Agarwal, CEO & Co-founder of NoBroker.com, "The average rent increase has been higher than average salary increments across cities which has prompted potential home buyers to take the plunge. While rents may stabilise with more supply coming in gradually, they will not come down.”

According to NoBroker’s annual report 2023, 74% of participants indicated that they favoured real estate as an option over other investment choices like Systematic Investment Plans (SIPs), stocks, gold, and Bitcoin.

This momentum in housing sales has been continuing for a while. Even in December 2023, housing sales were up 31% year on year, revealed a report by property consultant ANAROCK.

Diverging implications on the budget of homebuyers

However, an interesting trend is emerging within the buyer pool. Average urban buyers, who were previously looking at properties priced between ₹80 lakh and ₹1 crore, are now setting their sights on more expensive options, exceeding the ₹1 crore mark. This shift in preference suggests a desire for larger living spaces and the security of gated communities.

On the other hand, those who were initially considering homes in the 60-80 lakh range are now being priced out. Such buyers are opting for even more affordable options albeit at faraway places with lesser amenities. It is important to acknowledge the uneven impact on different income groups — while some buyers are capitalising on the positive market conditions, others are struggling to keep up with rising prices.

New projects in high demand

New projects are selling out on launch day, highlighting the urgency among buyers to secure a property. This surge in demand is driving up prices, especially for near-completion properties, as buyers rush to lock in purchases before prices climb further. Interestingly, the gap between established developers (Grade A) and newer companies (Grade B) is narrowing. Grade B builders are commanding prices closer to their Grade A counterparts, suggesting a more competitive market.

However, the recent easing of inflation in India could improve affordability for buyers, making it easier to get loans and participate in the market. This easing inflation might offer some relief for those looking to enter the Indian housing market.