India’s housing prices increase 5 per cent amidst healthy demand

V Nagarajan

A resurgence in India’s residential demand has led to a 5% increase in prices across the top eight cities while registering a marginal decline in unsold inventory during Q2 2022. Residential prices, which have surpassed pre-pandemic levels, have been seeing an upward trend led by rising demand amidst rising prices of construction materials.

Delhi-NCR saw the highest increase in residential prices at 10% YoY, followed by Ahmedabad and Hyderabad with 9% and 8% YoY increase respectively, according to a housing price-tracker report jointly released by Credai, Colliers and Liases Foras.

The sales momentum that started in the latter part of last year continued in Q2 2022 as well, led by pent-up demand and attractive pricing.

Hence, despite rising prices and an increase in new launches in the last few quarters, unsold inventory saw a dip in the majority of the cities.

Bengaluru witnessed the steepest decline of 21% YoY in its inventory overhang, led by higher sales.  

Only Hyderabad, MMR and Ahmedabad saw an increase in unsold inventory, which was led by significant new launches. MMR still accounts for the highest share in unsold inventory at 36%, followed by 14% in Delhi- NCR and 13% in Pune.

 “The central bank continues to increase repo rates to offset the impact of inflation and banks are expected to increase loan interest rates including that of home loans. As captured in this report, the housing prices have increased between 2 – 5% across cities, as materials and labour costs continue to remain high.

“We may see a marginal dip in demand due to increasing interest rates, but I am confident that the sales will continue to grow across segments from September, as we enter the festive season,” said, Harsh Vardhan Patodia, President of Credai National.

 “Rising homeownership amongst millennials supported by higher disposable income and willingness to upgrade to larger spaces equipped with better amenities has sparked a sharp growth in housing demand in the last few quarters.

“Demand for self-sustained properties replete with best-in-class amenities has also been increasing post-pandemic.

These have led to strong growth in housing sales in the last few quarters. Prices have also seen a 5% rise on YoY basis.

“The RBI has increased the repo rate amidst inflationary pressures and banks have already begun increasing the lending rates.

“However, the upcoming festive season is likely to keep the market sentiment high resulting in higher sales.” said Ramesh Nair, Chief Executive Officer, Colliers.

“Price to remain range bound. With discounted EMI schemes, we see early signs of developers absorbing the impact of increasing interest rates.

“Sales volumes are likely to improve as we see growing new supply with festive offers, said Pankaj Kapoor, Managing Director, Liases Foras.”

Over the period of two years prices in Delhi-NCR have been rising. Delhi NCR saw the highest increase in prices across India at 10% with an average carpet price of Rs 7,434 per sq feet in Q2 2022. MMR, which accounts for the highest unsold inventory at 36% share, saw a 14% rise in unsold inventory in the last year.

The rise in unsold inventory was led by significant new launches in the city. Housing prices largely remained range-bound, with a slight rise of 1% YoY. Bengaluru witnessed a sharp decline in its unsold inventory during Q2 2022, dropping by 21% YoY.

I have been working in the Gulf and my wife is in India. Can she invest in overseas property?  Please clarify. Arvindan, Sharjah
The Liberalised Remittance Scheme (LRS) is available for resident Indians upto USD2,50,000 per financial year for permitted current or capital account transaction.

It is available to all resident individuals.  Under the scheme your wife can open a foreign currency account abroad with a bank and purchase property abroad. It is mandatory to provide PAN number to make remittance under the scheme.

My brother in US died recently without making a Will.  What are the implications of his assets in India?  His wife and children are in India. Harish, Dubai.

Your brother’s entire estate will go to his surviving spouse (if all children are the children of your surviving spouse). Otherwise, your brother’s surviving spouse will receive up to one-half of the estate, with the remaining portion passing to surviving children from another spouse or partner.