Housing prices surge 20% in last two years: Report

Housing prices soar: Housing prices in India have surged by approximately 20 per cent over the span of just two years, from 2021 to 2023. This surge has been predominantly driven by growth in demand, according to the latest Housing Price-Tracker Report jointly released by CREDAI, Colliers, and Liases Foras.

Major metropolitan hubs such as Bengaluru, Delhi NCR, and Kolkata have witnessed a substantial 30 per cent rise in average housing prices in 2023 compared to 2021 levels. This growth has been fuelled by a notable uptick in housing demand, particularly in the mid and luxury segments, highlighting confidence amongst homebuyers.

Inventory declines dramatically

One of the most striking observations is the substantial drop in unsold inventory, particularly in Delhi NCR, which recorded a decline of 19 per cent during the 2021-2023 period, followed by Chennai and Pune. Despite a significant influx of new supply, the inventory remained largely rangebound, reflecting the buoyancy of the housing market.

The surge in new property launches, particularly in the mid and luxury segments, has been a key driver of this growth. Cities like Bengaluru, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR), and Pune have witnessed a surge of 2-2.5 times in new supply over the past two years, indicating robust activity and improved developer-market sentiment.

Factors behind price surge

Boman Irani, President, CREDAI National, attributed the year-on-year (YoY) increase in housing prices to a combination of factors, including strong demand from homebuyers, a conducive buying ecosystem, healthy macroeconomic factors, and rising prices of construction materials. He expressed optimism for the residential market, expecting sustained growth in the short to medium term, not only in the top eight cities but also in Tier II and III regions.

"The increase in housing prices stems from robust demand, favourable economic conditions, and rising construction costs. We anticipate continued growth in both demand and supply in 2024, extending beyond major cities to Tier II and III regions, Irani said."

Market performance analysis

Badal Yagnik, Chief Executive Officer of Colliers India, highlighted the exceptional performance of the market in 2023, with a 9 per cent annual rise in housing prices. He highlighted significant upticks in the high-end and luxury segments, along with infrastructure-led development, resulting in deeper price discovery across most markets. Looking ahead to 2024, he expressed confidence in maintaining the current trajectory, with the mid and luxury segments expected to thrive further, offering lucrative opportunities for investors and homebuyers alike.

"In 2023, housing prices rose by 9 per cent, driven by high-end and luxury segments. Bengaluru saw the highest increase at 21 per cent, followed by Kolkata at 11 per cent. Looking ahead to 2024, the market is set for continued growth, especially in mid and luxury segments," Yagnik said.

With housing prices continuing to reflect strong market momentum and a positive economic outlook, the real estate sector appears poised for sustained growth and expansion in the coming years.