Housing sales in the National Capital Region (NCR) plunged by at least seven percent between July and September, due to supply shortages in the segment of less than Rs 1 crore and higher movement in prices, according to data gathered by Knight Frank India.
In Q3 2024, the region saw 12,976 units of housing sales compared to 13,471 units in Q2. Compared to the January-March period, sales dropped by almost 16 percent from 15,907 units.
"In areas like Gurgaon and Greater Noida, we saw a major decline due to a sharp fall in available housing supply in less than Rs 1 crore ticket size. The homebuyers are left with no choice but to shift towards higher ticket sizes, which also led to a major dent in the homebuying segments," Vivek Rathi, head of research at Knight Frank India told Moneycontrol.
Experts say that most of the new housing supply the region is witnessing is in the premium and luxury segment, above Rs 1-crore ticket sizes. For example, a Rs 90-lakh home is being priced at Rs 1.1 crore or even more today, Rathi added. "We will see the market bounce back only when either the prices come down or a major supply of inventory hits the sector in the less than Rs 1 crore segment."
In the first half of 2024, NCR saw a steady four percent YoY increase in home prices to Rs 4,835 per sq ft similar to Mumbai, which also witnessed a similar price growth.
Mid-segment sales follow affordable housing downfall across cities
After affordable housing, now the mid-segment has shown a continued downward slide in terms of sales. The sub-Rs 50 lakh segment (affordable) showed a 14 percent decline in sales nationally for the July-September quarter, while sales in the Rs 50 lakh to Rs 1 crore segment recorded a 13 percent drop over the same period.
Sales growth in the residential segment has been singularly driven by the over-Rs 1 crore segment, which grew by 41 percent year-on-year in the July-September quarter.
While premium segment sales contribute more for developers in terms of margins, the lower-end segments provide the volume. In Mumbai, only around one-third of overall sales occurred in the premium category, while the same for the National Capital Region was at 85 percent. In Bengaluru, two-thirds of sales in the July-September quarter were in the above-Rs 1 crore segment.
Rathi noted that low levels of supply are affecting sales in the affordable and premium categories. In the reported quarter, launches in the affordable segment were down 2 percent year-on-year, while those in the mid-segment reported an even sharper drop, by 24 percent, over the same period. He also added that the increase in home prices, as well as mortgage rates due to tight monetary policy, has affected sales in the affordable and mid segments more than the above-Rs 1 crore segment.
Recent reports have indicated that home prices in Mumbai have risen by more than 30 percent over the past two years, with mortgage rates increasing by 150-200 basis points over the same period. The double-whammy has kept first-time homebuyers, as well as investors, in the wait-and-watch mode, as they wait for prices to cool down.
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