Brick by Brick: The Rising Value of India’s Real Estate

India’s real estate market is emerging as a global powerhouse, poised for remarkable growth. A recent industry report paints a promising picture, forecasting an astonishing $1 trillion in real estate sales in India by 2030. This surge is expected to contribute a substantial 13% to the country’s Gross Domestic Product (GDP) by 2025.

Even in Q2CY23, India’s real estate market is displaying impressive resilience. Sales continue to surge amid a continuous influx of new supply. The optimism extends to India’s top eight cities, which include Delhi-NCR, Bengaluru, Ahmedabad, Pune, Hyderabad, Chennai, Kolkata, and the Mumbai Metropolitan Region. All of these cities have experienced an overall uptick in housing prices during Q1CY23.

According to data from The National Housing Bank (NHB), India’s central bank, the All-India house price index recorded a significant year-on-year increase of 4.56% in Q1CY23 compared to the previous year. This follows a consistent upward trend, with increases of 2.79% in Q4CY22, 4.52% in Q3CY22, 3.45% in Q2CY22, and 1.8% in Q1CY22. However, when adjusted for inflation, nationwide house prices have witnessed a marginal dip of 1.42%.

Breaking down the numbers for specific cities, Bengaluru leads the way with an impressive year-on-year price hike of 16.3% (equivalent to 9.65% when adjusted for inflation) in the year leading up to Q1CY23. Kochi follows closely with an 8.46% increase, while Delhi stands at 6.65%. Meanwhile, more conservative house price growth figures are reported in cities like Lucknow (4.54%), Mumbai (4.27%), Kanpur (3.95%), Ahmedabad (2.47%), and Chennai (1.3%). In contrast, Jaipur and Kolkata have experienced notable decreases in house prices, declining by 8.5% and 8.15%, respectively.

Several factors contribute to this upward trajectory. India’s burgeoning middle class, bolstered by increased purchasing power, is actively engaging in property purchases. Government investments in infrastructure development are streamlining city living, thereby amplifying the demand for real estate in well-connected areas. Furthermore, India’s attractiveness as a real estate investment destination is growing steadily.

This positive momentum is further evident in-home sales, with an 8% increase in India’s eight major markets during Q2CY23, totaling 80,250 units compared to 74,320 units in the same period of the previous year, as reported by PropTiger. For the first half of CY23, the total number of homes sold in major cities reached an impressive 1,66,100 units, marking a substantial 14.6% rise from the corresponding period last year.

In summary, India’s real estate sector is on a robust growth trajectory, with projections of $1 trillion in sales by 2030, contributing 13% to GDP by 2025. Notably, housing prices in the top eight cities have surged in Q1CY23, driven by a burgeoning middle class, infrastructure development, and increasing attractiveness for real estate investments. This positive momentum is further reinforced by rising home sales, solidifying the sector’s pivotal role in India’s economic landscape.

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