The top six cities in India saw a 20% increase in housing sales in Q1 2024

Indian Real Estate Market Starts 2024 Strong

Despite challenges posed by rising prices, India's real estate market experienced a robust start in 2024, marked by increased demand for residential properties. This surge indicates underlying strength and potential within the sector.

Housing Sales Surge in Top Cities

Notably, the top six Indian cities—Delhi NCR, Mumbai, Bengaluru, Hyderabad, Chennai, and Pune—witnessed an impressive 20% surge in housing sales between January and March. According to NoBroker, the total number of housing units sold exceeded 147,000, highlighting significant activity in these key urban centers.

Driven by continuous advancements and investments within the real estate sector, the consensus is that the market will sustain its growth trajectory, underscoring its inherent resilience and promising potential. Further new project launches are expected to maintain momentum throughout the year.

RBI's Repo Rate Decision Benefits Homebuyers

Furthermore, homebuyers should benefit from the Reserve Bank of India’s recent decision to maintain the repo rate at its prevailing level. This stability provides a conducive environment for prospective buyers, which is likely to enhance their purchasing power in the market.

According to Amit Agarwal, CEO and co-founder of NoBroker.com, "The average rent increase has been higher than average salary increments across cities that have prompted potential home buyers to take the plunge." He further noted, "Even though rents might stabilize as more supply gradually enters the market, they will not decrease.”

Positive Market Sentiment and Economic Growth

The year has commenced exceptionally well, characterized by heightened demand and a consistent increase in real estate transactions. Bolstered by the nation's economic expansion, coupled with stable economic policies, buyers exhibit increased confidence in making significant investments. Agarwal stated, "We anticipate strong sales despite the ongoing increases in real estate prices, which is a sign of the positive sentiment surrounding home buying and the determination of buyers to acquire a physical asset. The comparatively lower interest rates on house loans, which currently range from 8.30% to 11.5% annually, further support this outlook."

Emerging Trends in Homebuyer Preferences: "K-Type" Growth

An interesting trend among homebuyers suggests a "K-type" growth trajectory. Individuals initially targeting properties between Rs 80 lakh and Rs 1 crore are now seeking higher-value options. Within gated communities, they are choosing larger unit sizes and properties. Conversely, those initially considering homes between Rs 60 lakh and Rs 80 lakh are now opting for more affordable choices. This divergence highlights how different market dynamics impact various population segments, contributing to the bifurcation of growth patterns.

Notably, some projects have been completely booked within a single day of their launch, reflecting heightened demand and rapid market movement.

Grade B Builders Closing the Pricing Gap

Additionally, there has been a noticeable surge in the prices of completed properties, incentivizing buyers to secure their acquisitions promptly before further price escalations occur. According to Agarwal, a significant trend is that Grade B builders are now commanding prices comparable to those of their Grade A counterparts, indicating a leveling of the playing field regarding pricing dynamics.

Future Outlook: Price Pressures and Inflation Benefits

Anticipate ongoing pressure on property prices due to robust demand for residential real estate and increased input costs, which may lead to further upward revisions. The recent reduction in retail inflation in India may benefit real estate purchasers by improving affordability, offering better loan terms, and fostering a more conducive market environment for real estate transactions.

According to NoBroker’s annual real estate report 2023, investors continue to prioritize real estate as a leading investment choice. Impressively, 74% of respondents favored it over riskier alternatives like SIPs, stocks, gold, and bitcoin, underscoring its enduring appeal. Bengaluru and Delhi-NCR account for half of the combined sales among major cities. Bengaluru anticipates experiencing annual growth exceeding 25% compared to 2023, indicating sustained momentum in this key market.