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Affordable properties are quickly losing their appeal in India. Since the pandemic, homes under Rs 50 lakh have lost ground, making up just 15% of India’s total residential real estate market.
According to JLL, during the last two years, the percentage of inexpensive houses has decreased from 27% in Q1, 2022 to 15% in Q1, 2024, marking the lowest market share for affordable homes in a long time.
However, a portion of luxury residences that cost more than Rs 1.5 crore are performing well.
Across the major seven metropolises in India, luxury residences accounted for around 19% of the market in Q1, 2022; in Q1, 2023, this percentage increased to 23%.
The Luxury Residences Between Rs 3 And Rs 5 Crore Has Increased
The proportion of these residences in total sales increased to 28% in the first quarter of 2024.
The percentage of the residential market that is made up of luxury residences between Rs 3 and Rs 5 crore has increased significantly, from 3% in Q1, 2022 to 7% in Q1, 2024.
Sales of ultra-luxury mansions costing more over Rs 5 crore have also increased significantly. Over the course of the two years, its market share has increased from 2% to 4%.
The distribution of sales across the various residential market categories has seen some significant changes. The percentage of quarterly sales in the luxury market, which includes flats costing Rs 3 crore and more, has increased significantly, going from 5% in Q1 2022 to 11% in Q1 2024.
Majority Of Homebuyers Are Becoming Interested In Luxury Homes
The cheap sector, which includes flats priced under Rs 50 lakh, has seen a decrease in its sales share, according to Siva Krishnan, Senior Managing Director of JLL’s Chennai and Coimbatore and Head of the company’s Residential Services division in India.
These numbers demonstrate that buyers are becoming more interested in the luxury market, which is a trend that is changing in the real estate industry. It emphasizes how important it is for developers to accommodate changing customer demands and modify their products appropriately,” he continued.
Due to a large number of launches and a positive customer reaction, the Delhi-NCR area had a particularly sharp increase in the sale of luxury residences in Q1 2024, accounting for almost 44% of total sales.
The Expansion Of The Residential Sector And New Launches
The range of prices between Rs 1.5 crore and Rs 3 crore witnessed the most sales for JLL in Mumbai, according to Samantak Das, Chief Economist and Head of Research and REIS, India.
This new stage of expansion in the residential sector has been brought about by the developers’ smart introduction of the appropriate items while keeping in mind market dynamics and demand.
It’s interesting to note that, in an effort to increase their market share and portfolio, several well-known developers also want to penetrate more recent markets and cities,” he stated.
Reasons For The Expected Increase In Home Prices
High property prices may be the result of two factors: either a long-term, uncontrollably rising trend in prices, or higher base prices brought on by structural issues.
As a result, the real estate market will be more transparent, more competitive, and more affordable. Between 1991 and 2021, house prices increased by 9.3% annually, which is comparable to the 9.2% annual growth of gold but less than the 13.5% annual growth of the Sensex and the 12.5% annual growth of nominal income.
This return profile across asset classes is in line with what is seen in other nations. Housing in India is therefore not expensive because of an abnormal price increase during the last few decades; rather, structural factors must be at play.
Source-ET
