There will be over 3 lakh residential units purchased in India in 2023, setting a 15-year high. In 2024, the number will go higher as lower inflation will encourage more homeowners to buy. The real estate market will remain affordable in 2024.
Also, grade-A developers who are completing their projects on a war footing will drive more people to buy homes. According to Anarock group chairman Anuj Puri, timely project completions are boosting overall consumer sentiments.
Real estate market 2024 Affordably priced
During the current festive quarter, residential home sales have been 30% higher than in 2022. Home prices have also gone up as a result of heavy demand and new launches. There have been some micro-markets around the tech hubs of Hyderabad, Bangalore and Pune where prices have soared by 25-33%.
There will be divergent trends in capital value growth across micro-markets and property types, largely driven by unsold inventory levels and inventory overhangs,” says Anshuman Magazine, chairman & CEO, CBRE India, South-East Asia, Middle East & Africa.
There have been good price appreciations in micro-markets like Whitefield in Bangalore, Gachibowli in Hyderabad and Wagholi in Pune. The average growth in property prices across the top 7 cities has been anywhere between 8-10%. According to Anarock, it is expected to increase at least 12% by 2024. Housing demand in the Andheri-Borivali belt has been boosted significantly by the Mumbai Metro Connectivity in the western suburbs.
With tremendous infrastructure development going on in full swing across the cities and states, we foresee the emergence of newer micro-markets as well as the strengthening of existing ones. The phenomenal boost in connectivity is also expected to lead to a rise in housing demand across the targeted micromarkets, according to Dhaval Ajmera, director, Ajmera Realty.
If interest rates ease, the net cost of buying a home may be reduced even if home prices increase. A few experts hope that a lower interest rate cycle will begin in the coming year. In December, the central bank maintained the same base interest rate for the fifth consecutive time.
In 2024, we are likely to see a renaissance with affordability levels expected to improve as macroeconomic fundamentals support a repo rate reversal and therefore interest rate reduction that could provide another boost to residential sales,” according to a JLL report Home Purchase Affordability Index’ (HPAI).
The criterion is space, not price
The lockdown-era love of people needing more space will not reverse as quickly as companies went back on work-from-home policies. Indians are willing to spend more for larger and better homes.
The lingering hybrid work policies are expected to keep people clamoring for workstations within their homes that support remote work and flexible living. Behavior has changed over time, which indicates a long-term change.
The demand for large homes remains high despite the upcoming changes to remote work laws. According to Manju Yagnik, VC of Nahar Group, this trend will continue in 2024, reshaping the real estate market as people seek homes that strike a balance between comfort, usefulness, and adaptability to changing work environments.
Affordability is no longer the only factor influencing Indian home buyers. Other factors include health and safety, community living, sustainability, and smart home technology integration.
Home buyers are expected to continue to display strong preferences for projects that offer enhanced accessibility to essential infrastructure, ancillary amenities and thoughtfully designed indoor and outdoor spaces – which will propel the demand for this segment going forward,” Magazine concludes.
Opportunities in tier-2 and tier-3
Demand for branded homes is also rising in smaller cities and towns due to growing affluence. Developers will move beyond the top 8 cities where amenities-driven homes are in high demand. Lucknow, Jaipur, Ahmedabad, Coimbatore and Chandigarh are the most popular tier 2 & 3 cities.
As opposed to big cities, these smaller towns and cities have affordable prices and superior infrastructure, which boost the real estate market,” said Chitnis.
A chunk of the new demand for the coming year will come from cities such as Kochi and Ahmedabad where NRIs have shown a lot of interest in buying homes.
Developers and homeowners are attracted to these regions because of their lucrative prospects.
Despite the growth in demand and promising development opportunities in emerging economies, we anticipate a spike in major branded properties outside the top 7 and 8 cities. Yagnik explains that greater connectivity, changing lifestyle preferences, and improvements in infrastructure are driving this growth.
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