Despite hardening property prices and home loan interest rate hikes in early 2023, it has been a superlative year for Indian residential real estate. Latest ANAROCK Research data indicates that housing sales in the top 7 cities have created a new peak in 2023, breaching the previous high of 2022.
Approx. 4,76,530 units were sold in 2023 against 3,64,870 units in 2022 across the top 7 cities – rising by 31% Y-o-Y. The last peak in the decade was seen in 2022, after 2014, when approx. 3.43 lakh units were sold in the top 7 cities.
New launches across the top 7 cities saw a 25% annual rise – from approx. 3,57,640 units in 2022 to approx. 4,45,770 units in 2023. MMR and Pune saw the most new launches, together comprising an nearly 54% share of total new launches in the year.
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Anuj Puri, Chairman, ANAROCK Group, said, “2023 has been phenomenal for the Indian housing sector, despite global headwinds, rising domestic property prices, and interest rate hikes over the first half this year. Housing sales in the top 7 cities breached the previous high of 2022, and new launches stayed in step with the current housing demand.”
“It was widely expected that rising property prices and interest rates, along with global market upheavals and uncertainties, would impact residential sales,” said Puri. “The market put paid to these predictions. Q4 2023 maintained the strong momentum set during the entire year with more than 1,27,370 units sold in the period. Interestingly, NCR was seen as deliberately restricting new supply in the year, to approx. 36,735 units, though it witnessed extremely healthy sales at approx. 65,625 units. With this cautious approach, NCR reduced its unsold inventory stock by a very significant 23% annually.”
Demand is likely to remain undeterred in 2024, even with average prices likely to appreciate by 8-10% across the top 7 cities. The unchanged home loan rates in the second half of 2023 helped maintain the overall positive consumer sentiment.
“While housing price hikes over the year did give rise to demand concerns, the unchanged home loan rates helped keep sales on an even keel,” said Puri. “Inflation in India has also more or less stabilized, and further hikes in the lending rate seem less than likely. The Indian economy remains bullish, and this directly correlates to residential demand. And, equally importantly, new supply is dominated by Grade A developers who are completing their projects on time. This is a strong housing demand bulwark.”
Among the budget categories, luxury housing demand increased exponentially as homebuyers continue to look for bigger livable spaces post the pandemic. The new luxury supply addition across the top 7 cities in 2023 has jumped up five times when compared to 2018. There is no reason to expect luxury housing demand to taper off in 2024.
Housing Sales
Residential sales stood at approx. 4,76,530 units in 2023 against 3,64,870 units in 2022 across the top 7 cities – rising yearly by 31%. MMR, Pune, Bengaluru, Hyderabad, and NCR, together accounted for 91% of the sales in the year.
* MMR recorded the highest sales in 2023 across the top 7 cities. With nearly 1,53,870 units sold in 2023, the city witnessed an annual increase of a significant 40%.
* Pune recorded sales of around 86,680 units in 2023 – an increase of 52% over 2022.
* NCR recorded sales of approx. 65,625 units in 2023, increasing by 3% over the last one year.
* Bengaluru saw approx. 63,980 units sold in 2023 – an annual increase of 29%.
* Hyderabad recorded sales of approx. 61,715 units in 2023 – a yearly increase of 30% over 2022.
* Kolkata recorded sales of approx. 23,030 units in 2023 – an annual increase of 9% over the previous year.
* Chennai saw approx. 21,630 units sold in Chennai in 2023 – a yearly jump of 34% over 2022.
New Launches
The top 7 cities saw approx. 4,45,770 new units launched in 2023, as opposed to 3,57,640 units in 2022 – an annual increase of 25%. The key cities contributing to new unit launches in the year were MMR, Hyderabad, Pune, and Bengaluru, together accounting for 83% of the total supply addition.
* MMR saw the highest number (approx. 1,57,700) of new units launched in 2023 among the top 7 cities. Over 61% of the new supply was added in the INR 40 lakhs to INR 2.5 Cr budget segment.
* Pune added approx. 83,625 units in 2023, a significant annual increase of 30% over the previous year. Over 80% of the new supply was added in the INR 40 lakhs – INR 2.5 Cr budget segment.
* Hyderabad added new supply of approx. 76,345 units in 2023 – an increase of 12% over 2022. Over 82% of the new supply was added in the INR 40 lakh to INR 2.5 Cr budget segment.
* Bengaluru added approx. 54,435 units in 2023, a yearly increase of 11%. Approx. 92% of the new supply was added in the INR 40 lakhs – INR 2.5 Cr budget segment.
* NCR launched approx. 36,735 new units this year – a significant 45% rise over 2022. Over 51% of the new supply was added in the INR 40 lakh to INR 2.5 Cr budget segment.
* Chennai added approx. 20,140 units in 2023, a whopping annual increase of 102% over the previous year. Over 82% of the new supply was added in the INR 40 lakh to INR 2.5 Cr budget segment.
* Kolkata added approx. 16,790 units in 2023, an annual increase of just 4% over 2022. Approx. 78% new supply was added in sub-INR 80 lakhs budget segment.
Commenting on the ANAROCK report, Sunil Dewali, Co-CEO of Andromeda Sales & Distribution Pvt Ltd, parent company of Andromeda Realty Advisors, said, “The real estate market, especially residential segment, in 2023 experienced a continued surge, initially sparked by the pandemic, with record-breaking sale transactions, particularly in prominent cities like Mumbai and NCR. Additionally, the average purchase price saw a substantial rise as homebuyers increasingly favored spacious properties with modern amenities. Looking ahead to 2024, the market is anticipated to maintain its current trajectory, with the mid and luxury segments continuing to thrive.”
Shravan Gupta, Founder and CEO of YOURS, a platform for fractional ownership of luxury second homes, said, “The demand for ultra-luxury housing climbed further, with fractional ownership playing a key role in expanding access. Rising property prices and the desire of affluent families to invest in prime vacation properties played a crucial role in the acceptance of fractional ownership concept. Recent SEBI guidelines on fractional ownership and small REITs are expected to further enhance its trust and acceptance, paving the way for rapid growth. As such it is well positioned to emerge as a preferred option for acquiring a piece of the luxury property market.”
Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited, said they have witnessed an exceptional year in housing sales during 2023, with the demand for luxury and ultra-luxury segments taking center stage. The market has experienced a surge with prospective buyers eagerly seeking high-end flats ranging from Rs 2 crore to Rs 100 crore.
“While the luxury market has shone brightly, it is important to acknowledge the continued robust activity in the low-cost and mid-income segments, contributing significantly to the overall housing sales growth. As we look forward to the coming year, we anticipate sustained demand, potential price stabilization, and a promising outlook for the entire spectrum of housing segments. Factors contributing to this positive trajectory include the country’s high economic growth, improved consumer trust in the sector, and the noteworthy success of reputable players gaining maximum market share,” he added.