Home prices up 10-15% on low inventory, increased buyer interest and rising rental costs, shows report.

Bengaluru: Residential property values in the country’s top six cities increased by 10-15% in 2023, mar- king the highest capital appreciation rates in a decade, driven by low inventory increased buyer interest, and rising rental costs, ac- cording to a report.

Strong demand has driven up residential prices in major housing markets, with Hyderabad and Bengaluru seeing the highest annual appreciation for two-bedroom homes, at 15% and 13.5%, respectively, while Mumbai saw a 10.3% increase. Delhi NCR saw an average 12% rise in property values, followed by Pune at 11%, according to a report by No Broker, India’s first proptech unicorn.

“The rising rental costs ranging between 10-30%, sometimes equating to or surpassing home loan EMIS, have been a pivotal factor in convincing tenants to invest in their own homes. This phenome- non has accelerated the realisation of homeownership dreams for many,” said Saurabh Garg, co- founder and chief business officer of NoBroker.

The demand in the real estate market is being driven not just by first-time buyers, with the majority of the buyers in the 25-45 age bracket coming from the private sector or IT/ ITes background across key cities such as Bangalore, Chennai, Hyderabad, Mum- bai, Pune, and Delhi-NCR, the re- port mentioned.

The security of owning a property has always been a big driver; however, we observed that the demand is now also driven by renters who feel squeezed in the current market, where rents have in- creased by up to 30%. They nave confidence in their future and are ready to buy a ho- ne,” said

Garg. Rental yields in key cities have reached as high as 6%, making the return on investment in residential accommodations as at- tractive as that in commercial properties. However, in most cases, rental yields usually offer between 2-3% returns. This parity, along with the price-rise expectation, is encouraging more investors to consider residential proper- ties as a viable investment.

“”The diversified investor base is adding to the market’s stability and growth. The escalating rents have also acted as a catalyst by nudging fence-sitters to take a plunge into home ownership. We see this trend paying off, especially for first-time home buyers, and we are also witnessing robust pre-sales,” said Mallanna Sasalu, CEO of Provident Housing.

The prominent launches by branded developers saw good sales traction across all seven cities.

New launches as well as new phases of existing projects have also entered the market at higher prices in some cities.

India’s top six property markets experienced an unprecedented surge in new launches during the first three quarters of 2023, totaling over 75,000 new residential apartments, a 25% increase com- pared to the same period last year.

According to industry estimates, the residential market in Q3 2023 recorded the highest quarterly sales since 2008, at 69,600 units. Residential sales broke all records with average quarterly sales of over 65,000 units until the third quarter of 2023. Real estate developers are strategically capitalising on the robust sales momentum demonstrated by the Indian economy.

“”The country’s real estate ecosystem has not only reclaimed its glory but has also matured immensely in terms of regulations, transparency, and innovation. 2023 has been a crucial year for the sector, and looking at the current rate of performance, we can anticipate that the momentum will persist,” said Captain K. Srinivas, CEO, Cornerstone Properties.

Source-The Economic Times

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