Residential Market Update: Q2 2023

In recent years, the residential market has consistently embarked on a new chapter of growth driven by buoyant consumer sentiment, robust property launches, competitive pricing, and a conducive interest rate regime. The strength of the residential market is evident from the robust sales volume recorded in the first half of 2023, with more than 62,000 units sold in each of the two quarters.

Notably, Q2 2023 saw sales of over 64,500 units, representing a 4% quarter-on-quarter growth. Interestingly, residential sales have consistently reached new peaks in each successive quarter over the past year. Aligning with this trend, Q2 2023 surpassed the previous historic high achieved in Q1 2023, making it the highest quarterly sales since 2008.

Key trends in residential market in Q1 2023 and H1 2023:

Backed by quality launches, quarterly sales set new benchmarks

Prominent national and regional developers have experienced a substantial increase in sales for their new launches, driven by strong interest from home buyers. Upon examining the quarterly reports of reputable developers, it is evident that 2023 is poised to establish itself as another record-breaking period for the residential market.

Residential sales surge to a 15-year high in H1 2023

Supported by a resilient domestic economy and a stable job environment, the residential market continued its upward trajectory in the first six months of 2023. Residential sales reached a 15-year high at 126,587 units in the first half of 2023, marking a 21% increase compared to the same period last year. Interestingly, around 58% of the sales recorded in H1 2023 (~73,000 units) were contributed by projects that were launched from January 2022-June 2023.

Sales of the premium segment apartments showed an upward trend

In H1 2023, the mid-segment apartment projects (INR 50 lakh – INR 75 lakh price category) dominated the half-yearly sales with a 24% share. However, the premium segment (more than INR 1.5 crore) also had a substantial share of around 21% in the H1 2023 sales volume. The share of affordable apartments priced below INR 50 lakh declined from 24% in H1 2022 to 19% in H1 2023 sales. A similar trend was witnessed in mid-segment apartments where the share, though still the highest has seen a drop from 28% in H1 2022 to 24% in the current first half.

New launches remain buoyant in Q2 2023 and H1 2023

Residential launches of more than 151,000 units were recorded in H1 2023, a rise of 24% y-o-y. The launches also increased on a quarterly basis by 2% with over 76,000 units launched in Q2 2023. Encouraged by strong consumer demand, developers have launched projects across the top seven cities of India. In H1 2023, most of the new launches were witnessed in Mumbai (24%), Pune (22%), and Hyderabad (19%).

Bengaluru, Mumbai, and Pune constituted 62% of the quarterly sales

Bengaluru led the quarterly sales with a 21% share followed by Mumbai and Pune with a share of 20% each. All these three markets also saw heightened activity in terms of new launches. Delhi NCR also made substantial strides accounting for 15% of the quarterly sales.

Robust demand leads to rise in capital values across the top 7 cities in India

In Q1 2023, residential prices in major cities have risen in the range of 6-9% y-o-y, though Bengaluru has witnessed the highest increase of around 11-12% y-o-y. Kolkata, with an improving buyer sentiment, has started seeing a positive movement in prices as well, albeit at a slower pace, with prices up by 2% y-o-y. The rise in prices is seen across the spectrum of new projects that are seeing strong buyer demand. Even new phases of existing housing projects are being launched at higher prices.