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The housing market has witnessed a surge in the first quarter of FY23, with prices in 42 of the 50 cities analysed registering an increase. This data comes from the latest Residex report by the National Housing Bank (NHB). Interestingly, while the rates for residential units have seen a dip in five cities, they remained consistent in three others.
Major metropolitan cities showed positive growth, as per the NHB Residex. Cities including Ahmedabad, which saw a rise of 13.5%, Chennai with 12.5%, and Hyderabad with 11.5% were among the frontrunners. Even traditionally high-demand areas like Delhi and Mumbai reported gains of 7.5% and 2.9% respectively.
Comparatively, when evaluated on a sequential basis, the 50-city index displayed a growth of 1.7% for April-June 2022, a slight decrease from the 2.6% seen in the prior quarter. Nevertheless, this demonstrates a consistent upward trend since June 2021.
Variability was observed across cities with Coimbatore experiencing a significant spike of 16.1% while Navi Mumbai saw a dip of 5.1%. The Housing Price Index (HPI) serves as a reliable tracker for these fluctuations, monitoring prices of residential properties across 50 select cities, using FY 2017-18 as a benchmark.
Further insights from the report show the HPI for under-construction properties — calculated using prices of unsold under-construction and ready-to-move units — rose by 5.7% year-on-year in the quarter ending June 2022. This is a notable increase from the 1.9% observed a year earlier. Analysts attribute this spike to the escalating costs associated with building materials.
Cities like Bhubaneshwar outperformed others with a whopping 28.6% increase, while cities such as Indore experienced a contraction of 13.2%. These fluctuations in property asking prices highlight sustained demand and the mounting costs of property development.
One crucial takeaway from the NHB Residex is the underlying optimism in the housing finance sector. The observed growth in both the composite HPI at Assessment Price and the HPI at Market Price signals this revival. Furthermore, the steady growth instils confidence not just in homeowners but also provides assurance to housing loan financiers about the value retention of assets.
In conclusion, the resilience shown by the housing sector in Q1 FY23, as evidenced by the uptrend in 42 cities, speaks to the overall health of the real estate market in India. While some cities experience contraction, the overarching trend leans positively, suggesting a robust future for homeowners and investors alike.
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