India ascended eighteen positions to secure the 14th spot in the third quarter of 2023 on Knight Frank’s global house price index. The country's home prices surged by 5.9% annually, indicating a significant upward trend.
In September 2023, the average annual growth rate for home prices in the 56 markets tracked by Knight Frank’s Global House Price Index was 3.5%. This marked a considerable increase from the 2.2% rise observed in the previous quarter.
According to Knight Frank, India's consistent economic growth has been the driving force behind the country’s burgeoning residential market. This growth has persisted despite challenges such as increasing home loan rates and inflationary pressures. The state and federal governments' aid during the pandemic helped propel the market.
Shishir Baijal, CMD of Knight Frank India, noted that “strong internal economic fundamentals, rising aspirational qualities of residential real estate, and an elevated interest cost environment brought on by elevated levels of inflation are driving heightened demand among homebuyers in prominent residential markets within the country.”
Baijal further highlighted that emerging residential hubs in India’s urban centers have been facilitated by the growing momentum in infrastructure development, catalyzed by the country’s increasing urbanization.
The Indian housing market has remained robust despite price increases. As many as 3.49 lakh units were sold in the top 7 cities by the end of the third quarter of 2023, compared to 3.65 lakh units in 2022.
Simultaneously, the total sales value of the sold housing stock increased marginally to Rs 3.48 lakh crore. The value of all residential property sales in the first nine months of 2023 already surpassed the entire year of 2022 by 7%.
After a five-to-six-year stagnation period beginning in 2013, real estate value started to decline. However, post-COVID, a significant resurgence in demand surpassed previous peaks, as stated by Prashant Rao, MD of Poulomi Estates.
Factors driving up property prices included pent-up demand, the urge to upgrade, and a willingness to pay for new features. Infrastructure development and economic environment improvements also contributed. Hyderabad consistently outperformed other top cities annually due to an influx of corporations moving their headquarters to the city. This trend is expected to continue.
In the first quarter of 2023, Turkey topped the rankings with an annual growth rate of 89.2%. The top five rankings included countries in southeast Europe, such as Greece (14%), Croatia (13.7%), and North Macedonia (11%).
With a 6.3% annual growth, Japan led the Asia-Pacific region, followed closely by India at 5.9%.
Despite rising costs for mortgage borrowers, global house prices have shown remarkable resilience. This is attributed to solid savings, pay settlements above inflation, and a shortage of stock available for purchase. Liam Bailey, Knight Frank’s global head of research, stated that the main challenge facing housing markets in 2024 will be low market liquidity, with sales volumes potentially dropping by up to 25% from recent peaks. “Only a move toward lower interest rates will boost sales activity,” he concluded.