A Look at India’s Residential Real Estate Price Surge
The residential real estate sector in India has shown consistent growth in prices since 2013, with significant appreciation in the last two years. According to a report by Anarock, a leading real estate services company, residential property prices have appreciated at a Compound Annual Growth Rate (CAGR) of 13% in the last two years, while Consumer Price Index (CPI) inflation has moderated by 1.3% annually to 5.4% by the end of FY24.
Shobhit Agarwal, MD & CEO of ANAROCK Capital, pointed out the trend, noting that average residential prices across the top seven cities have increased by a CAGR of 6% since the 2019 elections.This increase is substantial, rising from Rs 5,600 per square foot in June 2019 to Rs 7,550 per square foot by the end of FY24. A similar trend was observed after the 2014 elections, with average prices across the top seven cities rising by over 6% in 2014 compared to the preceding year, from Rs 4,895 per square foot in 2013 to Rs 5,168 per square foot in 2014.
Over the last decade, there have been periods when the supply of real estate exceeded demand, resulting in stable price growth that kept pace with inflation in the pre-pandemic era. Between 2013 and 2020, the top seven cities recorded a cumulative supply of 23.55 lakh units against a demand for 20.68 lakh units.However, post-pandemic, the residential real estate sector experienced a swift recovery, resulting in substantial price growth that has surpassed general inflation, as per Anarock’s findings.
It is important to note that the real estate sector is cyclical, and various factors such as economic conditions, policy changes, and market sentiments can impact prices. The current trend of price appreciation reflects the resilience of the real estate market in India and the confidence of investors in the sector’s long-term growth prospects.
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