We expect 2025 to be a year of stabilization for the Indian residential market with housing capital value growth not matching those of 2024
What are the major takeaways for the industry in 2024 that could shape strategies for 2025?
In 2024, the Indian residential market experienced a mixed performance largely due to the impact of general and state elections. Housing sales saw a slight decline of 2%, but the overall sales value grew by an impressive 16%. New launches fell by 7% as approval processes slowed down amid the elections. Consequently, the total new supply dropped to approximately 4.13 lakh units from 4.46 lakh units in 2023. Housing sales in 2024 were around 4.60 lakh units, valued at INR 5.68 lakh, compared to 4.77 lakh units worth INR 4.88 lakh in 2023. Average residential property prices in the top seven cities rose significantly by 21%, from INR 7,080 per sq ft at the end of 2023 to nearly INR 8,590 per sq ft at the end of 2024. This sharp rise in prices reflects the broader market trends influenced by elections and escalating input costs.
What are the projected trends that will shape the demand for the residential real estate market in 2025?
While 2023 created all-time high peak in housing sales activity, 2024 was not far behind. As mentioned above, 2024 has seen residential prices appreciate significantly across the top 7 cities in comparison to 2023. However, we may see average residential prices stabilizing in 2025 and the growth rate at which prices grew in 2024 vs 2023 may no longer continue.
Additionally, we may see several new launches in 2025 as listed developers have a significant pipeline of new supply. Amid the general and state elections and hence slow project approval process, they had to hold on to their new supply pipeline in 2024.
Are property prices expected to rise, stabilise or decline in 2025? What are the likely factors that will influence price trends?
If we consider data trends of the top 7 cities in the last five to six years, ie, between 2019 to 2024, then average residential prices have seen the highest rise in 2024 as against 2023. As per ANAROCK Research, the average property prices in 2024 witnessed 21% yearly rise in the top 7 cities as against 2023 – from INR 7,080 per sq. ft. in 2023-end to nearly INR 8,590 sq. ft. in 2024-end. Going forward, we expect 2025 to be a year of stabilization for the Indian residential market with housing capital value growth not matching those of 2024. Instead, there will be a steady growth amid increased input costs and high demand. In that respect, I think we will continue to see a largely end-user driven residential market.
What key factors are expected to fuel the growth of the residential real estate sector in 2025?
Housing demand continues to remain unabated across cities by the end-users largely. While sales saw a mere 4% yearly drop due to a decline in new launches and investors going into a wait-and-watch mode, 2025 looks promising. Data trends indicate that there is a healthy pipeline of new supply by the listed developers in 2025 because out of the total announced residential development of 253.16 mn sq. ft. over the next few years, merely 23% was launched in the first half of FY 2025. Much will also depend on what the upcoming Union Budget holds in store.
How is the industry tackling challenges such as unsold inventory and project delays?
As per ANAROCK Research, on an annual basis, available inventory declined by 8% in 2024-end across the top 7 cities amid decline in new housing supply during the current year. Over 5.53 lakh units are available for sale across the top 7 cities in India. Interestingly, Pune saw the highest decline of 20% in unsold stock on a yearly basis – from approx. 1,01,220 units by 2023-end to approx. 80,670 units as of 2024-end. Bengaluru and Chennai were the only cities to see a rise in their unsold stock. The fact that cities like Bengaluru have an inventory overhang of just 10 months, the rise in unsold inventory is not of any challenge for the developers.
