Surging Demand and Supply Propel Indian Real Estate to New Heights

By: Vikas Wadhawan, Group CFO, Housing.com, PropTiger.com and Makaan.com

The residential real estate market in India is anticipated to maintain strong demand momentum, surpassing pre-pandemic levels despite increased mortgage and property rates. Sales in the top 7 cities are predicted to reach over 262,000 units in 2022, showcasing the resilience of the housing market that has endured multiple disruptions over the past six years, including demonetization, RERA, GST, and the pandemic. The industry is currently experiencing an extraordinary resurgence, as evidenced by the latest data compiled by PropTiger.com, with property demand surpassing pre-pandemic levels and setting new records.

According to PropTiger.com’s data, the residential real estate market has consistently witnessed a surge in new supply, surpassing 100,000 units for four consecutive quarters. In the April to June 2023 quarter, there was an 8 percent year-on-year (YoY) growth in sales of residential units and an 11 percent YoY growth in new supply across eight major cities in the country. This sustained demand reflects the growing desire for homeownership and instills confidence in developers, resulting in the launch of 113,770 units in Q2 2023. The total new supply for H1 2023 reaches 261,570 units, marking the highest H1 level of new launches in a decade.

The surge in sales is not limited to specific cities but is witnessed across all top eight cities, with Mumbai and Pune dominating sales and accounting for 61% of the overall market share in the last quarter. In Q2 2023, a total of 80,250 units were sold in these eight cities, representing an 8 percent growth compared to the year-ago quarter.

In terms of pricing trends, the real estate market in Q2 2023 has seen a notable concentration of new supply in the INR 45-75 lakh price bracket, which accounted for 33 percent of total launches. This indicates a strong demand for affordable yet quality housing options among homebuyers. Additionally, there has been a remarkable increase in the share of units priced over one crore, growing from 14% in 2019 to 29% in Q2 2023. This suggests a growing segment of homebuyers willing to invest in higher-end properties, potentially due to increasing disposable incomes and a desire for premium amenities and features.

Developers have strategically focused on 2 BHK and 3 BHK configurations, catering to the preferences of homebuyers seeking more spacious living areas. This demand can be attributed to the rise of the hybrid work model, changing lifestyles, evolving family dynamics, and the desire for a more comfortable and flexible living space.

In conclusion, the Indian real estate industry is witnessing an extraordinary recovery with unprecedented demand and supply. The market’s resilience is demonstrated by surpassing pre-pandemic sales levels and witnessing a surge in new supply. Homebuyers’ preferences are shifting towards specific price brackets and larger configurations, reflecting their evolving needs and aspirations.