Robust demand, positive sentiment push housing prices up 7% in June quarter

Kolkata recorded the highest increase in residential prices at 15 per cent during the quarter

Amid robust housing demand backed by continued positive homebuyer sentiment and stable interest rates, housing prices across the top eight Indian cities increased 7 per cent in the quarter that ended on June 30 as compared to the same period last year, a report said on Wednesday.

According to the "Housing Price Tracker" released by real estate companies Colliers, Credai and Liases Foras, Kolkata recorded the highest increase in residential prices at 15 per cent year-on-year (YoY).

This has been attributed to the rising demand boosted by positive government incentives such as an extension of a 2 per cent reduction in stamp duty and an extension of 10 per cent reduced circle rates till September 2023.

Kolkata was followed by Delhi NCR and Hyderabad with 14 per cent and 13 per cent increases, respectively.

At the micro-market level, Delhi NCR's Golf Course Road and Dwarka Expressway witnessed the highest rise in housing prices at 46 per cent and 40 per cent, respectively, on a YoY basis.

"Notably, the newly developed Dwarka Expressway and the upcoming 50 km six-lane highway in Delhi NCR are expected to further drive demand in Gurugram, Ghaziabad and Noida," said Vimal Nadar, senior director and head of research, Colliers India.

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The rise in demand for homes in India has been attributed to factors like improved infrastructure, enhanced connectivity, rising disposable income, and government incentives.

"We are also witnessing record-breaking numbers due to the pent-up demand from covid and despite the price rise, we expect this trend to continue for the rest of the financial year – on the back of a relatively stabilised repo rate and lending eco-system. Additionally, the upcoming festive season will help further boosting the sales and sustain the momentum through the start of 2024," said Boman Irani, president of Credai National.

In tandem with sales, top cities have also seen heightened activity in new launches in the past few quarters. As a result, unsold inventory in India expanded by 13 per cent YoY.

According to the report, with increased demand for spacious dwellings, developers continue to launch high-end projects, which has pushed housing prices for under-construction units northwards in markets like Kolkata, Hyderabad, Delhi NCR and Bengaluru.

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"While developers continue to grapple with the challenges of higher costs of construction, housing demand remains unwavering. Housing demand is likely to further accelerate in the next few quarters led by the upcoming festive season and continued preference for home ownership," said Peush Jain, managing director of Occupier Services, Colliers India.