India residential market dynamics: Q3 2024
Sustained growth amidst evolving market dynamics
- Srija Banerjee
The Indian residential real estate market demonstrated remarkable resilience and growth in the third quarter of 2024, building on the momentum established earlier in the year. Despite some moderation in certain metrics, the overall trajectory remains positive, underpinned by robust demand, strategic supply additions, and evolving buyer preferences.
Sales momentum continues
The first nine months of 2024 witnessed record-breaking sales figures, with 229,908 units sold across the top seven cities. This represents approximately 85% of the total units sold in 2023, displaying a remarkable 17% year-on-year growth. The sustained sales momentum reflects the increased preference for home ownership, quality supply from reputed developers, and favourable economic conditions.
Q3 2024 specifically saw sales of 74,987 units, marking a moderate 8% year-on-year increase. While this indicates a slight deceleration compared to previous quarters, this still was the fourth consecutive quarter where residential sales exceeded the 74,000-unit mark. Mumbai, Bengaluru, and Delhi NCR continued to lead, accounting for about 62% of quarterly sales.
Luxury segment shines
One of the most notable trends in Q3 2024 was the exceptional performance of the luxury segment (apartments priced above INR 3 crore). Luxury sales doubled compared to the same period last year, with their share in total sales rising from 8% in Jan-Sep 2023 to 13% in Jan-Sep 2024. Delhi NCR emerged as a frontrunner in this segment, with around 45% of its sales coming from luxury properties.
The surge in luxury segment sales was complemented by a significant increase in launches within this category. Luxury launches grew by an impressive 117% year-on-year during Jan-Sep 2024, indicating developers' growing confidence in this market segment.
Supply dynamics
New residential launches during reached 228,329 units, achieving around 78% of last year's total launches. This represents a marginal 2% year-on-year increase, with Mumbai, Bengaluru, and Delhi NCR contributing about 58% of the total launches.
Q3 2024 specifically saw 68,874 new units launched, a 5% decrease from the same quarter last year. Despite this slight dip, the overall supply remained robust, driven by higher project announcements from reputed developers and the introduction of customised, tech-enabled projects catering to evolving buyer preferences.
Price trends
Residential prices in the top seven cities continued their upward trajectory in Q3 2024, with increases ranging from 3-20% year-on-year. Delhi NCR witnessed the most significant price appreciation at approximately 19%, followed closely by Bengaluru at around 14%. This trend reflects the strong demand and the gradual absorption of excess inventory in key markets.
Inventory management
The months-to-sell (MTS) metric, which indicates the expected time to liquidate existing stock, showed improvement. It decreased from 28 months in Q3 2023 to 22 months in Q3 2024, signalling a healthier balance between supply and demand. This reduction in inventory overhang is a positive sign for the market's overall health and stability.
Future outlook
Looking ahead, the residential real estate market is poised for continued growth and evolution. Sales in 2024 are expected to be 12-15% higher than the record-high sales achieved in 2023, with launches anticipated to reach 315,000-320,000 units, surpassing 2023 figures by 8-10%.
Reputed developers are likely to continue expanding their footprint, venturing into new cities, and diversifying their portfolios. Luxury and upper-mid segments are expected to maintain their impressive performance, but there is also likely to be sustained demand in the affordable and mid-market segments. With core city areas reaching saturation, suburban locations are expected to witness increased development activity and buyer interest. And the adoption of smart home technologies and digital sales platforms is likely to accelerate, catering to tech-savvy buyers.
As the market continues to mature and align with global standards, it presents significant opportunities for homebuyers, investors, and industry stakeholders alike. The coming quarters will be crucial in determining whether the current growth momentum can be sustained and translated into long-term market stability and value creation.
