After a brief post-pandemic boom, India’s real estate sector is showing signs of a slowdown, with home sales expected to dip by 18% in the July-September quarter of 2024. Data from PropEquity, a real estate analytics firm, highlights the steep decline, projecting sales to fall to 1,04,393 units across nine major cities, compared to 1,26,848 units sold in the same period last year.
The biggest slump is expected in Hyderabad, where sales are predicted to drop by 42%. Other cities like Bengaluru (26%), Kolkata (23%), Pune (19%), Chennai (18%), Mumbai (17%), and Thane (10%) are also expected to witness significant declines in home sales. Surprisingly, Delhi-NCR and Navi Mumbai are bucking the trend, showing growth of 22% and 4%, respectively.
Why Are Home Sales Falling?
The steep rise in property prices over the past two years is being cited as one of the main reasons for the drop in home sales. Experts point out that real estate prices have surged between 50% and 70%, leaving potential homebuyers, especially middle-class families, unable to afford homes.
Developers have shifted their focus towards luxury housing projects, with fewer affordable options available in the market. The price of a typical 2BHK flat in major cities has skyrocketed, putting it out of reach for many working-class families.
Investors have taken advantage of the rising prices, pouring money into high-end projects, while genuine end-users — those looking to buy a home to live in rather than as an investment — are disappearing from the market. This imbalance, driven by investors, isn’t sustainable for long-term growth. Experts warn that without an increase in affordable housing options, the market may face a deeper recession soon.
Bengaluru and Hyderabad to Witness Steep Drops in Sales
Bengaluru, a city that has long been a hub for tech workers and homebuyers, is expected to see a 26% drop in home sales. The number of units sold is projected to fall from 17,978 last year to 13,355 units during the same period this year.
Hyderabad, another key real estate market, is predicted to experience the most significant decline, with a 42% drop in sales. Residential sales in the city are expected to drop to 12,082 units in the July-September period, compared to 20,825 units last year.
Other cities like Kolkata and Chennai will also see noticeable declines, with sales dropping by 23% and 18%, respectively.
Affordability Crisis and Lack of Demand May Lead to Long-Term Recession
The primary issue driving the fall in demand is the sharp rise in property prices, which hasn’t been matched by income growth. This growing disconnect between prices and affordability has left many prospective buyers unable to enter the market. Without timely intervention, the situation could worsen, leading to a prolonged recession in the real estate sector.
Developers and policymakers may need to shift their focus towards creating more affordable housing to reignite demand and stabilize the market. In the absence of such steps, the future of the property market remains uncertain.
