DELHI/MUMBAI - Record housing sales in Delhi and Mumbai have led to a significant reduction in unsold inventory and a sharp increase in average residential prices. Between the first half of 2019 and the first half of 2024, prices have soared by 49%, driven by a combination of pandemic-induced demand, rising construction costs, and a surge in luxury housing.
In the National Capital Region (NCR), average residential prices have jumped from Rs 4,565 per square foot in H1 2019 to Rs 6,800 per square foot in H1 2024, marking a 49% increase. Similarly, in the Mumbai Metropolitan Region (MMR), prices have risen from Rs 10,610 per square foot to Rs 15,650 per square foot, reflecting a 48% increase over the same period.
Anuj Puri, Chairman of Anarock Group, highlighted a significant reduction in unsold inventory in the NCR. "The pandemic was an undisguised blessing for the National Capital Region. Once infamous for high unsold inventory fed by speculative demand and supply, the region has seen a sharp decline of over 52% in its unsold stock in the last five years – from approximately 182,000 units at H1 2019-end to approximately 86,900 units by H1 2024-end," Puri stated.
The steep rise in housing prices in both regions can be attributed to increased construction costs and robust sales. Between late 2016 and 2019, prices remained stable, but the onset of the COVID-19 pandemic triggered a surge in demand. Initially, developers enticed buyers with offers and freebies, but as demand grew, average prices were gradually increased. This strong demand has helped reduce unsold inventory, especially in the NCR.
Luxury Housing and Market Trends
"The surge in demand for homes underscores a fundamental shift in people's perception of homeownership, where the value of having a place to call home has become more apparent than ever before. There has also been a newly stirred up insistence on luxurious integrated townships that offer affluent homes, safety, and security to the homebuyers," said Aakash Ohri, Joint Managing Director and Chief Business Officer of DLF Ltd.
The inventory overhang in NCR has dropped to 16 months in H1 2024 from 44 months in H1 2019. A key factor in clearing the stock was the conscious curtailment of new supply, with only about 172,000 units launched in NCR between H1 2019 and H1 2024.
"The real estate market is experiencing significant demand for luxury housing and independent floors. This demand is driven by millennials looking for a lifestyle of convenience. Gurugram has played a key role in the surge of launches in Delhi NCR," added Vivek Singhal, CEO of Smartworld Developers.
MMR's current available stock stands at approximately 195,000 units. Over the past five years, the region has seen a 13% decline in its unsold stock, largely due to substantial new launches to meet resurgent demand. MMR has seen over 526,000 units launched between H1 2019 and H1 2024, three times the new supply in NCR during this period. The inventory overhang in MMR decreased to 14 months as of H1 2024 from 34 months in H1 2019.