Increasing construction costs jack up real estate prices

A housing price tracker report for 2022 by apex real estate body Credai, realty consultant Colliers India and data analytic firm Liases Foras says residential real estate prices have increased 5% in eight major cities including Bangalore during the April-June quarter while Delhi-NCR saw the highest increase in prices at 10%.

A rise in construction cost is one of the factors for the increase in property prices. The report said housing prices in India have surpassed pre-pandemic levels.

A resurgence in residential demand has led to a 5% increase in prices across the top eight cities (Delhi-NCR, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad) while registering a marginal decline in unsold inventory during Q2 2022.

Residential prices, which have surpassed pre-pandemic levels, have been seeing an upward trend led by rising demand amidst rising prices of construction materials. Delhi-NCR saw the highest increase in residential prices at 10% YoY, followed by Ahmedabad and Hyderabad with 9% and 8% YoY increase respectively, the report said.

The sales momentum that started in the latter part of last year continued in Q2 2022 as well, led by pent-up demand and attractive pricing.

Hence, despite rising prices and an increase in new launches in the last few quarters, unsold inventory saw a dip in the majority of the cities.

Bengaluru witnessed the steepest decline of 21% YoY in its inventory overhang, led by higher sales, the report said.

Only Hyderabad, Mumbai and Ahmedabad saw an increase in unsold inventory, which was led by significant new launches. Mumbai still accounts for the highest share in unsold inventory at 36%, followed by 14% in Delhi- NCR and 13% in Pune.