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.
Related News Articles
IIM Bangalore's Real Estate Research Initiative Partners with Bangalore Apartments Federation
Indian Institute of Management Bangalore's Real Estate Research Initiative has signed a Memorandum of Understanding (MOU) with Bangalore Apartments Federation to promote research and knowledge sharing in the real estate sector.
Unlocking the Potential of Badlapur: A Haven for Real Estate Investors
Discover the hidden gem of Badlapur, a booming real estate hub that offers unparalleled investment opportunities.
Hazoor Multi Projects: Small Cap Stock Sets Record Date, Shares Skyrocket 180% in 1 Year
Hazoor Multi Projects Limited, a leading player in infrastructure and real estate, has announced a 1:10 stock split and a dividend of Rs 2 per share. The company has set a record date for the same, sending its shares soaring by 180% in just one year.
MMRC Withdraws Nariman Point Property Auction After RBI's Request for Office Space
The Request for Proposal (RFP) for the property, issued on October 3, 2024, via the CPPP portal, had drawn widespread attention. MMRC had extensively marketed the property for auction, but the unexpected request from the Reserve Bank of India (RBI) has le
Uday Kotak and Family Acquire a Prime Sea-Facing Building for ₹400 Crore in Mumbai
Mumbai's real estate market has just witnessed a landmark transaction as Uday Kotak, the founder and former managing director of Kotak Mahindra Bank, and his family have acquired a luxurious, sea-facing building for an astounding ₹400 crore.
Gautam Adani’s Adani Properties Wins ₹36,000-Cr Motilal Nagar Redevelopment Project in Mumbai
Billionaire Gautam Adani's real estate arm, Adani Properties, has secured a major win by emerging as the highest bidder for the massive ₹36,000-crore Motilal Nagar redevelopment project in Mumbai. This strategic move further cements Adani's footprint in t