Looking to Purchase a Home This Year? Discover Which Budget Category Dominates Housing Demand

In a positive turn of events, the residential market in India’s eight key cities saw approximately 1.2 lakh units transacted in the first quarter of 2024, signalling the strongest Q1 sales performance since 2010. This surge reflects a substantial 41% uptick from the preceding year, surpassing the 30% decrease in new residential launches during the same timeframe. The uptick in sales can largely be credited to sturdy economic fundamentals, steady interest rates, and a conducive income landscape, prompting prospective buyers to conclude their purchases by March 2024.

Key Findings Regarding Housing Demand

Mumbai and Pune continued to lead the pack in residential property sales, collectively capturing 53% of the market share. This dominance highlights the enduring appeal and strong demand for housing in these key urban centres.

A closer look at the data reveals specific localities within Mumbai that have significantly contributed to this sales growth. Thane West, Dombivli, and Panvel emerged as the top performers, demonstrating robust demand and transaction activity in these areas. Additionally, Hinjewadi in Pune and Vasai in Mumbai also witnessed notable sales of residential properties.

These neighbourhoods provide a blend of attributes including advantageous positioning, ongoing infrastructure enhancements, affordability, and amenities, rendering them favoured choices for real estate ventures. Furthermore, features such as accessibility to key job centres, close proximity to business districts, and the advancement of social infrastructure have further augmented the demand in these regions.

Which Budget Category Saw the Maximum Demand from Homebuyers?

Interestingly, in Q1 2024, the trend regarding demand for high-end properties became more pronounced, with a substantial 37% of residential sales concentrated in the INR 1 crore and above price bracket. This surge in high-end property transactions marks a significant shift in the market dynamics, especially considering the consistent growth of this segment since the onset of the pandemic.

Prior to the pandemic in 2019, high-end properties accounted for a mere 11% of overall sales, highlighting a remarkable transformation in consumer preferences and purchasing behaviour.

Growth Drivers

The surge in demand for high-end properties reflects several underlying factors shaping the residential real estate landscape in India.

One key driver is the evolving socio-economic landscape, characterized by a growing segment of affluent buyers with a penchant for luxury living and upscale amenities.

Economic prosperity, coupled with rising disposable incomes among a section of the population, has fuelled aspirations for premium housing options. Additionally, changing lifestyles, urbanization, and globalization have contributed to the increased demand for high-end residential properties, especially in major metropolitan areas.

Furthermore, the COVID-19 pandemic has acted as a catalyst, accelerating existing trends and reshaping consumer preferences in the real estate market. The prolonged periods of lockdown and remote work arrangements have prompted individuals to reassess their housing needs, with an emphasis on spacious and well-equipped residences. As remote work becomes more prevalent, there is a growing inclination towards properties offering amenities like dedicated home offices, outdoor spaces, and recreational facilities, which are often characteristic of high-end developments.

Market Implications

A notable consequence owing to the increasing demand for high-end properties is the polarization of the market, with a widening gap between the demand for luxury properties and affordable housing options.

While high-end properties witness buoyant demand, there is a simultaneous decline in both supply and demand in the lower price ranges. For instance, the share of property demand in the less than INR 45 lakh price bracket has dwindled to 22%, down from a substantial 51% in the pre-pandemic period.

This growing disparity between the demand for high-end properties and affordable housing presents challenges as well as opportunities for various stakeholders in the real estate sector. Developers and investors may increasingly focus on catering to the needs of affluent buyers, leading to a proliferation of luxury residential projects and premium offerings. However, this trend also underscores the pressing need for policymakers and developers to address the affordability crisis and ensure adequate supply of housing for the middle and lower-income segments of the population.

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