India’s residential market posts 11% YoY growth in the first half

V Nagarajan

Sales volumes in the primary market have grown at an extremely healthy annualised rate of 29 per cent since 2020 and culminated in a 10-year high in 2023.

Market sentiments have been very positive largely due to an upbeat economic outlook with GDP growth rates at the highest levels in the world.

Increased savings during lockdowns, minimal income disruptions in mid and high- income brackets, and a robust economic growth forecast have fuelled demand in the residential real estate market in India.

The residential market sustained its momentum as it stepped into 2024 with sales in the first half (H1) of 2024 scaling an 11-year high in terms of half-yearly sales. The 0.17 million units sold in H1 2024 represent a healthy 11 per cent growth in YoY terms.

Sales have grown across all markets in YoY terms with the exception of NCR which shows an11year high in terms of sales. Most markets are currently at multi-year highs, and Hyderabad scaled an all-time high in H1 of 2024 with18,573 units sold during the period. Home sales in Mumbai also stand at a 13 year high with 47,259 units sold in H1 of 2024 constituting a healthy16 per cent YoY growth.

This was fueled primarily by the 117 per cent spike in the sale of units priced over INR 10 million compared to the same period last year.

Homebuyer, preferences are evolving rapidly. Residential units priced over INR 10 million constituted 41 per cent of the total sales across all the eight markets under our coverage. Sales in this segment have grown by 51 per cent YoY and it has been the primary driver for overall sales growth during H1, 2024.

Increasing prices, higher home loan rates and the comparatively adverse impact of the pandemic on homebuyers in this segment continued to weigh on demand. Developers have been ahead of the curve and have judged the shifting preferences of the market by launching lifestyle-oriented premium products. The share of the number of units launched in the INR 10 million ticket- size category grew from 36 per cent in H1 of 2023 to 47 per cent in H1 2024.

The Quarters to Sell (QTS) level is a metric that enables calculating the number of quarters required by the market to exhaust existing inventory levels. Generally, a lower QTS level denotes greater sales traction and better market health.

The QTS level for the eight markets has been falling consistently despite growing inventory levels, from 9.5 in H1, 2021 to 5.9 quarters (less than 18 months) in H1, 2024 and depicts a market with improving fundamentals despite increasing inventory. The QTS level of the premium category depicts a healthier image at 5.1 quarters.

While sales volumes have been robust in H1 2024, prices have also grown across all markets with Bengaluru growing at 9 per cent YoY and Mumbai, NCR and Pune growing at 4 per cent each.

Prices in Chennai and Hyderabad also grew by a healthy 5 per cent YoY each. This is the fifth consecutive half-yearly period of price growth across all markets.

The sales volumes achieved in the first half of the year despite the general elections being conducted in Q2 2024 showcases the strong undercurrent of demand in the market.

The optimistic economic outlook and interest rate scenario with possibility of rate cuts provide further headroom for demand.

With the basic fundamentals in place, the market looks well positioned to exceed the sales volumes of 2023 as it heads towards the festive season in H2 2024.

As a returning NRIs, what are the tax implications for my overseas property? Vijay Bhatia, Sharjah.

As an NRI or NOR (not ordinarily resident), if you sell any overseas assets, you do not have to pay any taxes in India. In case you need to buy a house in India out of the sale proceeds, you can first receive the sale proceeds in an overseas bank account and thereafter remit part or whole of the proceeds back to India without creating any Indian tax liability.

My husband after divorce got remarried and I have one son. How the property acquired will get distributed? Asha, Dubai.

If the property is self-acquired, he has the right to will it to anyone he wishes. But in the event of your husband dies intestate, your son and his future children from his second marriage will all have an equal right to the property since all of them will be categorised as class I legal heirs.