Residential prices across major real estate markets in India increased by around 3.5 percent in the April–June period over the previous quarter, according to the PropIndex report from the real estate platform Magicbricks.
Observers say that the increase in capital values of residential real estate in India reflects sustained growth, albeit stable in nature, with demand also growing by 4.6 percent over the same period.
On a year-on-year (YoY) basis, home prices grew nearly 24 percent for the April–June period, the report said. Infrastructure projects have been a key driver of home price increases, with cities such as Pune, Greater Noida, and Kolkata showing a strong jump in home prices, all in excess of 30 percent YoY.
Supply slows even as prices surge
The data showed that across the surveyed markets, long-term demand, defined by YoY growth, was slow over the same period, growing by a marginal 0.3 percent. The YoY growth is corroborated by market sentiments about runaway growth in 2023 and 2024 in residential sales taking a breather from the start of this year, particularly in the premium segments.
New supply addition during the quarter was the lowest over the past five years, signalling caution among developers and more focus on liquidating existing stock.
"While the overall growth is highly encouraging, the regional nuances highlight evolving buyer preferences and the ongoing need for developers to align supply with specific market demands, especially in the affordable housing segment. We anticipate this positive trajectory to continue, with infrastructure remaining a key growth engine," said Prasun Kumar, chief marketing officer at Magicbricks.
Regional preferences shape buyer behaviour
Demand trends have shown some divergence across cities, with buyers in information technology-led cities such as Bengaluru, Hyderabad, Gurugram, and Noida preferring larger homes, with either three or four bedrooms, which contributed to around 80 percent of demand in these cities. On the other hand, homebuyers in the Mumbai Metropolitan Region (MMR), which is the country’s most expensive property market, preferred more compact homes, of one or two bedrooms.
A developer with projects in the western suburbs of Mumbai added that with above-normal price increases in some suburbs, and with supply in affordable and mid-ticket categories slowly increasing after a two-year lull, would-be homebuyers have been deal-hunting and have settled for lower ticket prices instead. To be sure, due to Mumbai's elevated real estate prices, there is a wide divergence between ticket price categories of various cities.
Recent improvement in affordability in Mumbai, according to Knight Frank India's Affordability Index, has brought back buyers into the housing market, according to developers and brokers. Besides price increases in higher categories, three consecutive cuts in the repo rate by the Reserve Bank of India have also helped in improving affordability in lower ticket sizes through easier access to credit.
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