Surge in Housing Demand: In April 2024, housing demand in India’s seven major cities experienced a notable uptick, with a 28% year-on-year increase. This surge reflects a positive trajectory in the real estate market, complemented by a 17% year-on-year increase in demand thus far in 2024. However, amidst this surge, there are nuanced trends emerging, including a decline in new launches by 10% year-on-year and a 15% year-on-year dip in overall supply.
Inventory Dynamics and Price Adjustments
Despite the increase in demand and a decrease in new supply, the unsold inventory has seen a commendable decline of 7% year-on-year. This decline is particularly significant as it has contributed to a reduction in inventory months from 19 to 15 compared to the same period last year. Moreover, this correction in unsold inventory levels has led to price adjustments across all major cities, with average home prices witnessing a year-on-year surge.
Market Outlook and Predictions
The pause in rate hikes by the Reserve Bank of India (RBI) coupled with increased business development efforts by real estate developers has positioned the market for further growth. Institutional equities anticipate an improvement in sales momentum, especially for organized developers. Additionally, the medium to long-term outlook suggests a consolidation trend favoring organized developers, propelled by factors such as rising capital intensity, credit constraints, and a focus on execution.
Insights from Brokerage Reports
According to a report from the brokerage, organized developers are experiencing enhanced cash flow post-COVID, which is expected to bolster their market share. Developers with strong balance sheets are well-positioned to capitalize on attractive business development opportunities. Overall, the brokerage predicts that stronger players will continue to gain market share in the foreseeable future.
Conclusion
The housing market in India’s major cities is showing promising signs of recovery and growth. Despite challenges such as reduced new launches and supply, the increase in demand, coupled with a decline in unsold inventory, indicates a positive trend. With favourable market conditions and proactive measures by developers, the real estate sector is poised for further expansion and consolidation.
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FAQs
Q1: What contributed to the surge in housing demand in India’s major cities in April 2024? A1: The surge in housing demand can be attributed to factors such as the pause in rate hikes by the Reserve Bank of India and increased business development efforts by real estate developers.
Q2: How did the unsold inventory levels and average home prices change compared to the previous year? A2: The unsold inventory witnessed a decline of 7% year-on-year, leading to a reduction in inventory months from 19 to 15. Average home prices surged year-on-year across all major cities.
Q3: What are the predictions for the market outlook in the medium to long term? A3: The medium to long-term outlook suggests a consolidation trend favoring organized developers, driven by factors such as rising capital intensity and a focus on execution.
Q4: How are organized developers expected to benefit from the current market conditions? A4: Organized developers are expected to benefit from enhanced cash flow post-COVID, which will help them gain market share. Additionally, developers with strong balance sheets are well-positioned to capitalize on business development opportunities.
For further details and in-depth analysis, refer to our comprehensive market reports and expert insights from leading industry sources.
