NCR Housing Sales Decline 7% Amid Low Inventory and Rising Prices
Sales in the National Capital Region (NCR) have dropped by at least 7% from July to September 2024, largely due to a shortage of affordable housing options priced below Rs 1 crore and a surge in home prices. According to data from Knight Frank India, the region recorded 12,976 housing units sold in Q3 2024, down from 13,471 in Q2 and nearly 16% lower than the 15,907 units sold in the January-March period.
Shift Towards Higher Ticket Sizes
Vivek Rathi, head of research at Knight Frank India, noted a significant decline in areas like Gurgaon and Greater Noida due to a lack of available homes under Rs 1 crore. Homebuyers are being forced to consider higher-priced options, which has negatively impacted the overall market. Most new housing supply is now concentrated in the premium and luxury segments, pushing prices up. For example, a home previously priced at Rs 90 lakh is now listed at Rs 1.1 crore or more. Rathi believes the market will only recover if prices stabilize or if more inventory becomes available in the under Rs 1 crore segment.
Rising Home Prices Impacting Sales
In the first half of 2024, home prices in NCR increased by 4% year-on-year to Rs 4,835 per square foot, mirroring trends in Mumbai. The decline in sales has been particularly pronounced in the affordable housing segment, where homes priced below Rs 50 lakh experienced a 14% drop. Similarly, the mid-segment (Rs 50 lakh to Rs 1 crore) saw a 13% decrease in sales during the same period.
Despite the overall decline, the segment above Rs 1 crore saw a remarkable 41% increase in sales year-on-year in Q3 2024. While premium segment sales generate higher margins for developers, the lower-end segments typically account for larger sales volumes. In NCR, approximately 85% of overall sales are in the premium category, compared to one-third in Mumbai.
Supply Challenges in Affordable and Mid-Segment Housing
The current low supply levels are impacting sales across both affordable and premium categories. During the reported quarter, new launches in the affordable segment decreased by 2% year-on-year, while mid-segment launches fell by 24%. The rising home prices and increased mortgage rates—up by 150-200 basis points—due to tighter monetary policies are disproportionately affecting the affordable and mid-segments, leaving first-time homebuyers and investors in a wait-and-see mode until prices stabilize.
Recent reports indicate that home prices in Mumbai have surged by more than 30% over the last two years, further complicating the purchasing landscape for buyers.
