Will Indian Property Prices Continue To Rise?

As a potential homebuyer, you cannot rely on anyone but yourself to figure out if you are being asked a fair price for the home you plan to acquire. Hence, it’s vital to know how the price graph in your city has moved in 2022 and which way it is headed this year.

Knight Frank India in its report ‘India Real Estate Residential and Office: July-December 2022’ specified that Chennai has seen a 20.6 per cent (15,416 units) upsurge in launches in 2022 as compared to 2021, which saw 12,783 units launched. This limited increase in launches, many real estate’s experts state, is the result of limited wateriness on the side of the developers, a tepid demand climate due to decreasing affordability, and the draining effect of rising construction costs. The report also shows that property prices in Chennai had already augmented by 6.2 per cent in 2022 and are expected to upsurge further in 2023, with limited availability of stock being one of the main reasons for the same. Navin Kumar, the executive member of CREDAI Chennai, opines, “The hike was even sharper due to high labour cost, steel prices, cement and other materials. 

The Economic Survey of Karnataka 2021–22 reports that urban Bengaluru has the highest yearly per capita income in the state of Karnataka, at Rs. 5,41,638, despite the fact that the future of the city is still uncertain. In fact, according to the same report from Knight Frank, the city's affordability index for purchasing a home is at 27%, which, when translated, means a resident would need to spend 27% of their monthly income in order to afford a basic home in India's Silicon Valley. 

Mumbai has never had a deficiency of housing demand, and this was evident from the 35 per cent YoY rise in sales in 2022. Although, at first glance, the rise may seem ordinary to many, it must be known that the rise came despite an increase in stamp duty rates in terms of a one per cent Metro cess (development tax) hike.

The report also references that Mumbai retains the title of being the most luxurious city to buy property in, with the city clocking in an average of Rs 7,367 per sq. ft; even the second-most-luxurious city Bengaluru comes nowhere close to the maximum city’s numbers at Rs 5,511 per sq. ft.

Concerning the city’s price graph in the last year, it has seen an upsurge of seven per cent, but with regards to what is in store for the near future, Sandeep Maheshwari, the chief working officer of a real estate firm, clarifies that given the market is prejudiced by an unsteady economic climate, the value rise might witness some time-lag. “Right now, prices are steady. But in my opinion, if you want to buy a house this year, you should wait until the first half of 2023. By the end of this year, these building costs will be totally unfiltered and approved on to the customer because the developer will only be able to bear so much given the continued rise in input costs, adds Maheshwari.

 

The National Capital Region (NCR) was in the headlines last year after it saw the highest number of projects launches in contrast to any other city. The city that saw almost nil launches in 2021, had a virtual increase of launches in 2022 by a glorious 207 per cent. While the launches might mean more catalogues and therefore more options for buyers, half of the launches in the region, clarifies Knight Frank’s director of research, Vivek Rathi has been in the >Rs one crore segment. “This has also been a reaction to the request as most of the city required homes in this segment.