Young and upwardly mobile professionals have for long equated success with ownership of a premium home—perhaps a three- or four-bedroom condo in a gated community with acres of greenery and a clubhouse that comes with a gym, swimming pool and spa. Many of them were forced to put their dream purchase on hold as the pandemic raged between early 2020 and 2022, taking a heavy toll on lives and livelihoods. As the effects of Covid-19 receded, home sales made records in 2022 and 2023. The pandemic led to the introduction of a work-from-home culture and middle-class buyers bought roomier apartments to accommodate a home-office even if they had to borrow more. Last year, the music stopped playing and the party lost its zest. Economic uncertainty at home and overseas, conflict in Ukraine and the Middle East, the re-election of Donald Trump as US president and his threats of a steep hike in tariffs rocked financial markets and dampened housing demand. More bad news has come in April. Trump executed his threat of reciprocal tariffs against the biggest trading partners, including India, on April 2, plunging the world into new economic and trade uncertainty and triggering apprehensions of a global recession. While the festive period saw a sequential increase in sales, there was a YoY decline in sales and launches. -DHRUV AGARWALA, GROUP CEO, HOUSING.COMPROPTIGER.COM “While the October-December festive period saw a quarter-on-quarter increase in sales, there was a year-on-year decline in both sales and launches in most regions,” says Dhruv Agarwala, Group CEO of real estate advisory firms Housing.com and PropTiger.com. “Factors such as global economic uncertainties, major state elections and price increase across the country led to both developers and buyers adopting a wait-and-watch approach,” he adds. Developers Rattled It’s an all-too-familiar story that has played out periodically in India’s housing market. Before the outbreak of Covid-19, a once-in-a-lifetime event, the Indian property market had weathered a downturn that lasted as long as five years, from 2015 to 2020. Similarities are now being drawn between the current situation and the downturn, unnerving developers and potential homebuyers. After stagnant growth in the first half of 2024, home sales in most top metropolitan markets slumped in the crucial festive months spread over third and fourth quarters of the calendar year. The latest numbers, for January-March 2025, reinforce concerns of a potential crisis in the housing market. Data shows that home sales in key markets like Bengaluru, Pune, Mumbai and Hyderabad declined by up to 25% in 2024, after growing by healthy double digits the previous year. According to PropTiger, in the December 2024 quarter, home sales in India’s top eight markets—Delhi-National Capital Region (NCR), Mumbai, Pune, Bengaluru, Chennai, Kolkata, Hyderabad and Ahmedabad—tumbled 26% year-on-year to 106,038 units from 143,482 in the corresponding period in 2023. As a result, overall sales in 2024 tallied 470,899 units, a 9% decline from 514,820 in 2023. The trend has been acknowledged by most developers, who have cut down on new project launches as a result. In the fourth quarter of 2024, new launches fell 33% and sales declined 26% YoY. In the whole of calendar year 2024, realtors launched 15% fewer units than in 2023 (481,724 units) compared with a 9% slide in home sales to 411,022 units. Pradeep Aggarwal, founder and chairman of property developer Signature Global (India) Ltd, says the downtrend in 2024 was primarily “due to global economic uncertainties and inflationary pressures.” The downtrend in 2024 was primarily due to global economic uncertainties and inflationary pressures. -PRADEEP AGGARWAL, CHAIRMAN, SIGNATURE GLOBAL Aggarwal, who has of late shifted focus to premium housing from his initial forte of affordable homes, says the current trends may drive consolidation in the real estate market. To be sure, home loans have grown, led by high-income borrowers. Data released by the National Housing Bank shows that total outstanding home loans grew to Rs 35.5 lakh crore by end-February from Rs 31.87 lakh crore in March 2024. Distant Recovery? Even so, a recovery looks distant. Research by Anarock Property Consultants shows that in January-March, the decline in home sales gained pace and net absorption plunged 28% YoY to 93,280 units. New launches declined 10% YoY to 100,020 units in the country’s top real estate markets. Hyderabad, which grew by leaps and bounds during the post-pandemic years, reported a 49% decline in sales in the first quarter. Mumbai (-26%), Delhi-NCR (-20%), Pune (-30%), Bengaluru (-16%), Kolkata (-31%) and Chennai (-26%) also posted significant declines. The two key property markets in Maharashtra—Mumbai and Pune—accounted for 51% of the overall home sales in India. Mumbai and Bengaluru accounted for around 52% new launches. Industry experts and developers are blaming a steep increase in home prices over the past several quarters, apart from the economic uncertainties, for the downtrend. According to Anarock, average residential property prices across top cities rose 10-34% in the first quarter of this year from the same period last year. Luxury Bucks The Trend The increase came on top of a massive jump in average per square-foot price rise of 10-49% YoY in Q4 of 2024. According to analysts, this was primarily due to a steep rise in new supply in premium and luxury segment in the first quarter. Delhi-NCR and Bengaluru recorded the highest annual price jump of over 34% and 20%, respectively. That is not necessarily a bad thing—at least for developers with an eye on the luxury housing market. In spite of a decline in overall home sales, the top end of the market—driven by high net-worth individuals (HNIs) and non-resident Indians (NRIs)—continues to flourish. “Despite global economic uncertainties, the demand for high-end properties in India has shown resilience, underscoring the confidence of affluent buyers in the long-term value of premium real estate. There has been an increase in the percentage share for the high income group,” the National Housing Bank wrote in a recent report. Outstanding loans to high-income earners—those earning Rs 18 lakh and more per year—grew to Rs 1.1 lakh crore in September 2024 from Rs 83,838 crore in September 2023. The growth accelerated to 29.4% during the year from 18.8% a year ago. Robin Mangla, president of real estate developer M3M India Ltd, is gung-ho about the growing prominence of luxury homes in Delhi-NCR, where 34% of real listings are now priced above Rs 10 crore. “This surge is driven by increasing demand from HNIs, NRIs, and investors seeking exclusivity, space, and premium amenities,” says Mangla. The market in and around the capital that has been hurt by poor sales, unfinished projects and fraudulent developers for years, has been growing at a brisk pace since 2023 and managed to beat the downturn in 2024. The NCR market recorded growth while sales in other key markets declined. Mangla says a combination of strategic infrastructure developments like the Dwarka Expressway and the Noida International Airport and an expanding population of affluent buyers is creating an “environment ripe for growth.” Parvinder Singh, CEO of Trident Realty, concurs. “We are observing an extraordinary rise in the demand for luxury homes (in Gurugram), particularly along the Dwarka Expressway,” he says, adding that a growing influx of investments by NRIs is boosting developers focused on the NCR. Not all prospective homebuyers are sailing in the same boat. Take, for instance, Amit Sharma, 36, a media professional with a working wife and two children aged 8 and 4. The Sharmas, residents of Gurugram in NCR, earn Rs 2.2 lakh per month. Sharma finds that apartments, priced at Rs 2.5 crore to Rs 3 crore for a three-to-four-bedroom unit with a carpet area of 1,300 square feet, are beyond his reach. Downside Risk Some industry leaders are pointing to potential risks, including the likely involvement of speculators, riding the luxury market boom. The person we try our best to stay away from is the speculator because that is the person who will suffer in a poor economic cycle. -RAJIV SINGH, CHAIRMAN, DLF LTD On March 21, Rajiv Singh, Chairman of DLF Ltd, told industry analysts and investors that a section of homebuyers could be at risk because of their tendency to speculate on a steep rise in prices. “The person we are worried about and try our best to stay away from is the speculator,” he explained. “That’s because the speculator is the person who overtrades, will take advantage of the instalment payment schemes which are available and try to make bookings which at the end of the day cannot be funded unless somebody else can be found to take the property off his hands. That is the person who will suffer in a poor economic cycle,” Singh said. Singh’s concerns are not unfounded. Some buyers resell their allotments at a premium in the secondary market even before taking possession, increasing the risk of a default if the market sentiment sinks. DLF says 25% of customers who booked homes during recent launches may be speculators who will resell their allotments. DLF reported bookings worth Rs 7,200 crore within 72 hours of the pre-launch phase of its luxury residential development DLF Privana South in Gurugram against 1,113 luxury apartments in late-2023. Overall, it reported bookings worth over $4 billion (more than Rs 37,000 crore) in three years between FY22 and FY24. “And we watch our receivables very, very closely, and very, very carefully. I hope people in the industry remain conscious and don’t chase sales bookings. It is quite a dangerous metric,” he adds. Rate Cut Hope Although overall sales and new launches are sliding, industry experts and developers are harboring hopes of a recovery. As economic conditions improve, backed by a lowering of lending rates, the real estate industry will return to steady growth in the not-too-distant future, says Signature Global’s Aggarwal. “We are confident of achieving our pre-sales target of Rs 10,000 crore and launches worth Rs 16,000 crore in FY25. The next year also, we are expecting 20-25% growth in pre-sales, further strengthening our growth trajectory,” he says. The timing of the repo rate cut [in April] is critical. The market was showing signs of fatigue, with sales in Q1 2025 witnessing a decline. -SAMANTAK DAS, CHIEF ECONOMIST AND HEAD OF RESEARCH, JLL Samantak Das, Chief Economist and head of research and real estate investment trusts for India at JLL, says with two consecutive rate cuts by the Reserve Bank of India (RBI), by 25 basis points each in February and April, the industry is looking at a potential boost to homebuyer sentiment. “The timing of this rate cut is critical. The market was showing signs of fatigue, with sales in Q1 2025 witnessing a decline. This intervention could be the spark that reignites the flame in the residential real estate sector,” Das says. Stakeholders in the real-estate industry are pinning their hopes on more rate cuts by the RBI bringing down the cost of home loans, sparking a recovery in consumption and boosting economic growth to help skirt a deeper slowdown this year.  @arndutt
