Real estate price outlook 2024: Here’s what to expect from residential property next year

Source: Business Today

The Indian residential market remained unstoppable in 2023. In the first nine months of 2023, housing sales reached an all-time high. According to ANAROCK Research, total housing sales in the first nine months were more than 349,000 units across the top 7 cities, which was 96 per cent of the total sales recorded in 2022, despite the rise in both interest rates and housing prices.

Anuj Puri, Chairman, ANAROCK Group, said the trend has continued in the current quarter as well, with several developers seeing a significant uptick in both new launches and housing sales. In Q3 2023, housing sales hit a new peak, with approximately 120,300 units sold across the top 7 cities.

“This indicates that the appetite for homeownership has remained undeterred, with maximum sales being driven by end-users. Meanwhile, there has been increased new supply by the leading and listed developers, who also reported robust housing sales. This trend will continue in the upcoming quarters as well, since homeownership sentiment has increased hugely in 2023. Residential demand continues to remain strong,” said Puri.

The market watcher further added that amid this strong demand, several developers had a healthy pipeline of new project launches during the year, particularly during the ongoing festive quarter across all the top 7 cities. As per ANAROCK Research, more than 328,000 units have been launched in the first nine months of the year across the top 7 cities, while in the corresponding period in 2022, about 265,000 units were launched in the top 7 cities, thereby increasing by 24 per cent on a yearly basis.

As for commercial demand, the first half of the fiscal year 2024 has been a relatively tepid period for commercial office space activity across the top 7 cities, with both net absorption and new completions remaining mostly stagnant as compared to the same period last year. “The silver lining is that despite all domestic challenges and global headwinds, including layoffs early on, office activity remained more or less the same in the first half of FY 2024 as compared to the corresponding period in FY 2023. It was widely anticipated that commercial demand would see a downturn in India amid layoffs by several large corporations and shrinking businesses,” said Puri.

As per data, in the first half of the fiscal year 2024, the Indian office market witnessed a meagre 5 per cent surge in fresh office supply across the top 7 cities, amounting to nearly 25.12 million square feet. Among the cities, the southern cities (Bengaluru, Hyderabad, and Chennai) continued to dominate in the first half of FY24 (H1FY2024), collectively comprising 72 per cent of the total new office supply across the top 7 cities.

The road ahead

If we are to consider the current scenario, Puri added that we may see an overall 8-10 per cent jump in average residential prices in 2023 as against the previous year. 

The fact is that despite rising interest rates and global headwinds, residential demand remained at an all-time high across cities. “Average residential prices across the top 7 cities increased in the range of 8-18% in Q3 2023 when compared to Q3 2022, mainly due to an increase in the prices of construction raw materials and an overall rise in demand,” he added. As per ANAROCK Research, the average property prices in the top 7 cities combined increased by 11 per cent in the year, from Rs 6,105 per sq. ft. in Q3 2022 to nearly Rs 6,800 per sq. ft. in Q3 2023.