Housing prices across major cities in India have experienced significant increases recently, adding to the already complex dynamics of the real estate market. A recent report has revealed an impressive 11 percent year-over-year increase in housing prices across eight key cities, marking the 15th consecutive quarter of rising prices since 2021.
Leading the surge is the National Capital Region (NCR), where prices soared by 32 percent. Areas like Dwarka Expressway and Golf Course Extension, which saw price hikes of over 50 percent, are particularly illustrative of this trend. The report highlights the growing demand for luxury and ultra-luxury residential projects, driving this growth. It's noteworthy how the region's real estate has adapted to changing buyer preferences, with spacious homes becoming increasingly sought after. Since the pandemic's onset, housing prices have escalated nearly 75 percent, signaling fervent interest from buyers flooding the market.
Bengaluru follows closely behind, with housing prices climbing by 24 percent year over year. The city’s appeal continues to attract both end-users and investors, enhancing its status as a desirable location. Other cities also reported positive growth, but to varying degrees. For example, Pune saw prices rise by 10 percent, and the Mumbai Metropolitan Region (MMR) noted a more modest increase of 4 percent. Meanwhile, Chennai's market showed slower growth with just 2 percent.
Compounding these price rises is the Gurugram district's decision to increase circle rates—from December 1, 2024—to align them more closely with market trends. The revisions amounted to hikes of 10 to 30 percent across various locations, significantly impacting property valuation and registration processes.
Despite these soaring prices, unsold inventory continues to decline across these cities. Collectively, the eight cities retain over 10 lakh unsold housing units, but MMR contributes approximately 40 percent to this inventory. Interestingly, Pune, Chennai, and Kolkata have managed to reduce unsold stock significantly compared to previous years. This shrinking inventory indicates shifting developer strategies, where operators are increasingly leaning toward luxury and ultra-luxury segments, reducing their focus on affordable housing amid saturations at lower price points.
The market outlook remains cautiously optimistic. Experts from the Confederation of Real Estate Developers’ Associations of India (CREDAI) and Colliers are projecting stabilization of housing demand toward the year's end. They anticipate continued focus from developers on larger and more compact units, catering to changing buyer demands. The introduction of flexible payment plans and potential repo rate cuts by the Reserve Bank of India may also offer some financial breathing room for homebuyers, which could sustain residential sales momentum moving forward.
This continued escalation not only signals strong market performance but also raises questions about affordability and accessibility for prospective buyers. With increased construction costs—reported to have risen by 39 percent over the past four years—many are apprehensive. The reality of these rising prices highlights the complex interplay between buyer demand and economic factors, setting the stage for what lies ahead for India's real estate market.
