Home price index rises by 4.3% amid high interest rates, inflation: RBI

The annual HPI growth varied widely across the cities, ranging from a high growth of 8.76 per cent (Bengaluru) to a decline of (-)2.0 per cent (Kanpur). On sequential (quarter-on-quarter) basis, all-India HPI decreased by 0.1 per cent in September 2024-25. Ahmedabad, Lucknow, Kolkata and Chennai recorded a sequential rise in house prices during the latest quarter, RBI data shows.

Home price index for Mumbai rose by 2.95 per cent to 303.62 in September 2024 as against 294.92 a year ago, Delhi increased by 3.31 per cent to 350.40 from 339.16 and Bengaluru by 8.76 per cent to 360.11 from 331.08.

The RBI’s home index is based on transaction-level data received from the registration authorities in top ten major cities.

Average housing prices across the top eight markets in India rose 11 per cent year-on-year at Rs 11,000 per sq ft during Q3 of 2024, led by sturdy demand and positive market sentiments, industry body CREDAI said. Interestingly, average housing prices have increased for the 15th consecutive quarter since 2021. All the eight major cities saw an annual increase in housing prices with Delhi NCR witnessing the highest rise at 32 per cent, followed by Bengaluru at 24 per cent rise during the quarter. After registering record high sales over the last two years, the demand momentum across the top cities is stabilizing. Nevertheless, with anticipation of healthy residential activity in the last quarter, 2024 is likely to end on a strong note, it said.

However, overall unsold inventory continued to witness a quarterly drop for the third consecutive quarter, led by healthy uptake in housing units. At the end of September 2024, unsold inventory stood at over 10 lakh housing units across the eight major cities, with Mumbai Metropolitan Region (MMR) accounting for a majority at about 40 per cent share. Unsold units in Hyderabad saw a modest dip on a sequential basis despite a yearly increase of about 28 per cent.

“The ongoing rise in housing prices is another validation of positive homebuyer sentiments and the highly conducive nature of the real estate market. We are seeing more and more aspirational homebuyers come to the fore – resulting in bigger homes that are also being reflected in the rise in prices as homes continue to get more expansive, truly reflecting the current market dynamics and consumer preferences,” said Boman Irani, President of CREDAI National.

“While the housing market is gradually stabilizing, the outlook for the residential segment remains positive supported by strong underlying market fundamentals. Developers are recalibrating their strategies, particularly in the price-sensitive segments, by offering compact size units,” said Badal Yagnik, Chief Executive Officer, Colliers India.

“We expect this robust momentum to continue going into the new year and are hopeful of rate cuts in the impending future,” Irani said.

“Although average housing prices have continued to increase steadily, witnessing a 11 per cent YoY growth during Q3 2024, the likely easing of monetary policy and anticipated repo rate cuts can potentially bring financial relief to homebuyers in the near term. Moreover, flexible payment plans and freebies to attract homebuyers will continue to aid in residential sales momentum,” Yagnik said.