If you’re planning to buy a home in the ongoing financial year, here’s a reality check. Property prices will keep going up, though at a moderate pace, according to a report.
After two years of double-digit growth, real estate rates are now set to rise at a steadier pace of 4-6% annually, according to a new Crisil report. While demand for premium homes remains strong, affordable and mid-segment options are shrinking fast. So the big question for homebuyers is – should they take the plunge now or wait in hopes of a price correction?
According to the report, residential real estate developers will see stable sales growth this fiscal and the next as demand steadies after three years of post-pandemic recovery. Demand, or volume, is seen rising 5-7% and average prices 4-6%.
Housing supply will continue to exceed demand
“With supply expected to continue exceeding demand, inventory levels should inch up this and next fiscal. But strong collections and deleveraged balance sheets of developers will keep their credit profiles healthy,” the report said.
“Our analysis of 75 real estate companies, accounting for 35% of the residential sales in the country, indicates as much.”
“In the three fiscals through 2025, sales clocked a compound annual growth rate (CAGR) of 26%. Demand clocked 14% CAGR during the same period, with the balance being contributed by the growth in realizations.”
Last fiscal, demand was flat because of elevated capital values and delay in launches in some cities due to state elections and changes in property registration rules, the Crisil report said. This fiscal and next, demand growth is expected to rebound driven by improving affordability on account of lower interest rates and normalization of price growth, he said.
Sustained demand for premium and luxury houses
Demand growth will further be supported by sustained demand for premium and luxury houses and smoother launches across key micro markets, as the previous issues causing delays in launches abate.
Gautam Shahi, Director, Crisil Ratings, said, “The premium and luxury segments in the top seven cities have witnessed a significant surge, with their share of launches increasing from 9% in calendar year 2020 to 37% in 2024. This can be attributed to rising incomes and urbanisation, which have fuelled the desire for larger, more luxurious living spaces.”
As the trend of premiumisation continues,
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