As Global Housing Markets Struggle, It’s a Different Story in India

Even as the housing markets in major economies such as the US, China, the UK and Canada seem to have entered their worst phase in 15 years, things couldn’t be different in India.

In the South Asian nation, housing demand never really recovered fully after the COVID-19 pandemic, but are starting to revive now.

According to the latest data, the market is at its healthiest in over three years during the month of September as well as the three months ended September, with sales crossing the 1 lakh mark for the first time.

Sales and prices have surged, while inventories have declined.


Let’s first start with September. During the month, India’s top 7 cities saw housing sales increase 15% year-over-year, according to numbers compiled by Nuvama Research, and demand remained healthy, building on the momentum seen in recent months. On a month-on-month basis, sales were up 1%.

Among major cities, Hyderabad saw the biggest jump with sales up 32% versus last September.

However, real estate majors — who have been spooked by the sluggishness seen in the market in the last three years — remained cautious in September too. As a result, overall monthly new launches continued to decline.

Launches fell 17% year-over-year in September, indicating caution and liquidity constraints amid recent interest rate hikes by the Reserve Bank of India.

As a result, demand is clearly outpacing new supply, and this is having two results — inventory is down and prices are up. Unsold inventory across India’s top cities dropped 4% year-over-year in September.

Average housing prices rose in most top cities in September, especially in the National Capital Region which saw 29% annual appreciation.

Nuvama Research believes India’s housing sales growth is likely to be sustained, aided by improved affordability despite some mortgage rate and price increases this year. The research firm is positive on major listed developers like DLF and Brigade Enterprises that stand to gain from market consolidation toward more organized players.

Third Quarter

Housing sales in India’s top 8 cities rose 36% year-over-year in the September 2023 quarter, according to Incred Equities. Quarterly sales topped 0.1 million (1 lakh) units for the first time, reaching around 0.12 million units sold.

All cities saw an increase, but growth was led by strong demand in Mumbai and Pune. On a quarterly basis, housing launches were up 24% versus last year’s September quarter, but still lagged the sharp rise in sales, Incred said.

According to Nuvama, sales rose 21% — not 24% — YoY. Compared to the June quarter, said Nuvama, housing sales were up 5%. Again, the star of the show was Bengaluru, with a sales growth of 24% QoQ.

In terms of segment, it was the premium segment that outperformed others, with Incred’s data showing 30%+ quarter-over-quarter. The premium segment continues to significantly outperform demand in lower priced affordable housing as income disparities rise in an era of quantitative easing.

Residential prices rose across the major housing markets, with Bengaluru seeing the most appreciation. Other cities saw price increases in the 5-10% range. Interestingly, rising property prices over time have also lifted many projects into higher pricing segments.

Incred Equities estimates the time required for developers to liquidate inventory has fallen to 2.3 years, down from 2.5 years in the previous quarter. This suggests a faster pace of sales relative to existing stock.

The robust quarterly sales growth comes even as some economists warn of global headwinds for India’s economy. Incred Equities believes the housing upcycle is underpinned by structural supply shortages and favorable demographics. Additionally, they see consolidation benefiting major listed developers disproportionately.

India’s housing demand is benefitting from consolidation toward major developers, increases in affordability, and positive demographic drivers. These factors differentiate India from many global housing markets like the US, China and UK which face cooling demand.

Listed developers well positioned to capitalize on the upcycle include names like DLF, Brigade Enterprises, Godrej Properties and Oberoi Realty. However, developers continue to exercise caution on new launches given liquidity considerations.

Further interest rate hikes from the RBI could cool momentum at the margin, but major long-term demand drivers remain in place.