NCR Housing Sales Plunge 7% Amid Supply Shortages and Price Surge
Housing sales in the National Capital Region (NCR) have declined by 7% between July and September due to supply shortages in the segment of less than Rs 1 crore and higher movement in prices.
Ncr Housing SalesSupply ShortagesPrice SurgeKnight Frank IndiaReal EstateAffordable HousingReal Estate MumbaiOct 03, 2024
Vivek Rathi, head of research at Knight Frank India, attributes the decline to a sharp fall in available housing supply in less than Rs 1 crore ticket size, particularly in areas like Gurgaon and Greater Noida. As a result, homebuyers are being forced to shift towards higher ticket sizes, leading to a major dent in the homebuying segments.
Experts note that most of the new housing supply in the region is in the premium and luxury segment, above Rs 1-crore ticket sizes. For instance, a Rs 90-lakh home is now being priced at Rs 1.1 crore or more. Rathi believes that the market will bounce back only when prices come down or a major supply of inventory hits the sector in the less than Rs 1 crore segment.
In the first half of 2024, NCR saw a steady 4% year-on-year increase in home prices to Rs 4,835 per sq ft, similar to Mumbai. The mid-segment sales have also shown a continued downward slide, with the sub-Rs 50 lakh segment (affordable) witnessing a 14% decline in sales nationally for the July-September quarter. Sales in the Rs 50 lakh to Rs 1 crore segment recorded a 13% drop over the same period.
Sales growth in the residential segment has been driven by the over-Rs 1 crore segment, which grew by 41% year-on-year in the July-September quarter. While premium segment sales contribute more to developers' margins, the lower-end segments provide the volume. In Mumbai, only around one-third of overall sales occurred in the premium category, while the same for NCR was at 85%. In Bengaluru, two-thirds of sales in the July-September quarter were in the above-Rs 1 crore segment.
Rathi notes that low levels of supply are affecting sales in the affordable and premium categories. Launches in the affordable segment were down 2% year-on-year, while those in the mid-segment reported a 24% drop over the same period. The increase in home prices and mortgage rates due to tight monetary policy has affected sales in the affordable and mid segments more than the above-Rs 1 crore segment.
Recent reports indicate that home prices in Mumbai have risen by over 30% in the past two years, with mortgage rates increasing by 150-200 basis points over the same period. This has kept first-time homebuyers and investors in a wait-and-watch mode, waiting for prices to cool down.
Frequently Asked Questions
What is the main reason for the decline in housing sales in NCR?
The main reason for the decline in housing sales in NCR is the supply shortages in the segment of less than Rs 1 crore and higher movement in prices.
How much did housing sales in NCR decline between July and September?
Housing sales in NCR declined by 7% between July and September.
What is the current trend in home prices in Mumbai?
Home prices in Mumbai have risen by over 30% in the past two years, with mortgage rates increasing by 150-200 basis points over the same period.
Which segment is driving sales growth in the residential segment?
The over-Rs 1 crore segment is driving sales growth in the residential segment, with a 41% year-on-year growth in the July-September quarter.
What is the impact of low levels of supply on sales in the affordable and premium categories?
Low levels of supply are affecting sales in the affordable and premium categories, with launches in the affordable segment down 2% year-on-year and those in the mid-segment reporting a 24% drop over the same period.
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