 "Demand for luxury homes overtakes affordable ones for first time in India")
In the July-September quarter, for the first time in India, sales of high-end homes priced above Rs 1 crore have surpassed demand in the affordable segment, priced below Rs 50 lakh, according to a report by real estate consultancy Knight Frank. The "India Real Estate Q3 2023" report, released on Wednesday, highlighted that the number of homes sold in India during this quarter reached a six-year high, with a sale of 82,612 units. This figure was 12 per cent higher than the 73,691 units sold in the corresponding quarter of the previous year.
Knight Frank reported that the highest sales were recorded in homes priced between Rs 50 lakh and Rs 1 crore. With 29,827 units sold during the quarter, this segment accounted for a market share of 36 per cent. Sales in this segment jumped 14 per cent year-on-year to 29,827 units. Bengaluru, with 6,879 units, Pune, with 6,086 units, and Mumbai, with 5,360 units, collectively accounted for 60 per cent of all homes sold in this price bracket.
Following closely was a 35 per cent market share for homes priced above Rs 1 crore. This category witnessed the most significant surge in demand, with sales jumping 39 per cent quarter-on-quarter to 28,642 units, up from 20,501 units the previous year. Region-wise, the National Capital Region (NCR) recorded the highest sales in this category, followed by Mumbai and Bengaluru.
In contrast, the affordable segment, homes priced below Rs 50 lakh, saw its market share decline to 29 per cent, down from 36 per cent last year. A total of 9,930 units were sold this quarter, compared to 10,198 units in the same quarter last year. Notably, the current market share of affordable homes is significantly lower than the 54 per cent recorded in 2018.
"This is a very significant change, indicating that the market has shifted towards higher-value properties, while the affordable segment languishes due to rising cost factors," the report noted.
"Elevated interest rates and rising prices have had little impact on higher-ticket-size homebuyers. However, the affordable segment has been severely affected, necessitating further interventions to stimulate demand and improve development viability," said Shishir Baijal, chairman and managing director at Knight Frank India.
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Baijal added that there are several concerns, particularly in the affordable housing sector. "Economic turbulence in recent quarters has impacted lower-income consumers, affecting areas like rural consumption and the lower end of passenger vehicle sales. The decline in the affordable housing segment is worrying, as it has traditionally been the largest buying segment and is crucial for long-term industry growth," he said. Baijal further mentioned that a prolonged slowdown could adversely affect the real estate sector in the long term.