Real Estate Sector Faces Challenges in 2024 Amid Declining Home Sales and High Prices
New home sales across seven major cities in India saw a decline for the first time since the pandemic, as high housing prices and elevated borrowing costs dampened buyer interest in 2024.
Real EstateHome SalesHousing PricesRbiAffordable HousingReal Estate MumbaiJan 01, 2025
This prediction is based on the expectation that developers will boost new supply to meet demand.
Real estate developers and property consultants are hopeful that the Reserve Bank of India (RBI) will cut the repo rate this year, which would enable banks to lower interest rates on home loans.
They are also looking forward to fiscal incentives in the upcoming Budget to support the affordable housing segment, which has lost appeal in recent years.
According to data from Anarock, new home sales across seven major cities—Delhi-NCR, Mumbai Metropolitan Region, Kolkata, Chennai, Hyderabad, Bengaluru, and Pune—declined by 4% in 2024 to 4,59,650 units.
New supply also fell by 7% to 4,12,520 units.
This drop in sales was the first since the pandemic and was partly attributed to a high base effect, reduced launches, and an increase in prices.
Sales volumes had been on a steady rise since the COVID-19 downturn.
After a 47% decline in 2020, housing sales grew by 71%, 54%, and 31% in 2021, 2022, and 2023, respectively.
Sales had dropped from 2,61,355 units in 2019 to 1,38,350 units in 2020 due to the pandemic.
The market then rebounded to 2,36,510 units in 2021, surged to 3,64,880 units in 2022, and reached 4,76,525 units in 2023 before experiencing a marginal decline in 2024.
Anarock Chairman Anuj Puri expects the housing market to stabilize in 2025, with a muted price growth.
He noted that the upcoming Union Budget will play a significant role.
The industry has been advocating for an increase in the deduction limit of interest on home loans under the Income Tax Act to boost sales, especially in the affordable and mid-income categories.
G Hari Babu, National President of NAREDCO, anticipates continued growth in the real estate sector, driven by a stable economic environment and supportive government initiatives.
Boman Irani, National President of CREDAI, highlighted that the Indian real estate sector, which is the second-largest job creator, still faces policy-related roadblocks.
He is optimistic about government interventions to streamline these issues, particularly for the affordable housing segment.
Irani emphasized the need to redefine affordable housing, expand 80C benefits, and reduce interest rates to spur growth in Indian real estate.
According to a Naredco-Knight Frank report, the Indian real estate market size stood at nearly USD 500 billion in 2022 and is projected to reach USD 5.8 trillion by 2047.
CREDAI and Colliers also estimate the market size to jump to USD 5-7 trillion by 2047.
Real estate experts believe that the consolidation in the sector will continue, with consumer demand shifting towards reputable players from less reliable builders.
Big and branded real estate players have been actively acquiring land through purchases and partnerships with landowners, a trend expected to persist in 2025 and beyond.
CREDAI is pushing for government assistance in increasing the availability of land parcels to meet the growing need for residential and commercial real estate spaces, supporting rapid urbanization and economic growth.
Frequently Asked Questions
What is the expected price trend in the Indian primary housing market in 2025?
The Indian primary housing market is expected to see a modest single-digit price rise in 2025, following a 21% increase in 2024.
Why did new home sales decline in 2024?
New home sales declined in 2024 due to high housing prices and elevated borrowing costs, which dampened buyer interest. This was the first decline since the pandemic.
What are the industry's expectations from the RBI and the upcoming Union Budget?
The industry expects the RBI to cut the repo rate, which would help lower interest rates on home loans. They also hope for fiscal incentives in the Union Budget to boost supply and demand for affordable housing.
How has the affordable housing segment been performing recently?
The affordable housing segment has lost some appeal in recent years. Industry leaders are advocating for policy changes to revitalize this segment, such as expanding 80C benefits and reducing interest rates.
What is the projected growth of the Indian real estate market by 2047?
According to various reports, the Indian real estate market is projected to grow to USD 5-7 trillion by 2047, from nearly USD 500 billion in 2022.
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