Post-Covid, steady price rise has caused a major shift in the dynamics of the residential real estate market in India. Considered premium not so far ago, homes priced above Rs 1 crore are now the largest segment in the local housing market.
As per the latest data from PropTiger, the share of homes priced above Rs 1 crore has surged to 37% of the overall housing market in India in Q1, 2024 (January-March). The rise in its share is steady and steep.
In Q1, 2023, homes priced above Rs 1 crore formed 24% of the market, essentially meaning in the last one year its share has grown by a whopping 13 percentage points. In comparison with earlier years, the rise is even sharper. From 16% in Q1, 2019 to 19% in Q1, 2020 to 21% in Q1, 2022, the share of premium homes has grown fast in the past two years.
Homes priced between Rs 45-75 lakh are the second largest category with 26% of the market. Its share, however, has remained stable over the past five years. From 24% in Q1, 2019, it has gained only 2 parentage points. While the Rs 25-45 lakh price category – representing affordable homes – has lost momentum. From 26% of the housing market in Q1, 2019, its share has shrunk to 17% in Q1, 2024.
The fall in sales is the sharpest in the lowest price band – homes priced up to Rs 25 lakh. From 25% of the overall market in Q1, 2019, its share has plummeted to 5% in Q1, 2024. According to industry experts and realtors, steep rises in the cost of materials, labour, and land prices have turned such low-income projects unviable. Thus, no realtors are launching homes priced under Rs 25 lakh and sales are taking place from the existing inventory.
“The data indicates a significant trend in buyer behaviour, with a shift towards high-value acquisitions. There has been a consistent increase in the sale of properties in higher price brackets, including those valued between INR 75 lakh-1 crore and above INR 1 crore. This trend suggests a growing inclination towards upscale real estate offerings, potentially driven by factors such as increased disposable income and changing lifestyle preferences,” analysts at PropTiger note.
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