Strong Growth Amid Inflation Moderation
Residential real estate prices have shown a continuous upward trend since 2013, appreciating at a compound annual growth rate (CAGR) of 13% over the last two years. This rise comes despite the moderation of Consumer Price Index (CPI) inflation, which averaged 1.3% annually, settling at 5.4% by the end of FY24, as per data from Anarock.
Post-Election Price Trends
Shobhit Agarwal, MD & CEO of ANAROCK Capital, highlighted that average residential prices across the top seven cities increased at a CAGR of 6% following the 2019 elections. Prices rose from Rs 5,600 per sq ft in June 2019 to Rs 7,550 per sq ft by the end of FY24. A similar trend was observed post-2014 elections, with prices rising over 6% from Rs 4,895 per sq ft in 2013 to Rs 5,168 per sq ft in 2014.
Supply and Demand Dynamics
Over the past decade, periods of stable price growth were witnessed when the supply of real estate exceeded demand, aligning with inflation rates in the pre-pandemic era. From 2013 to 2020, the top seven cities saw a cumulative supply of 23.55 lakh units against a demand of 20.68 lakh units. Inventory levels peaked at approximately 8 lakh units by the end of 2016.
Post-Pandemic Market Recovery
Following the pandemic, the residential real estate market experienced a rapid recovery, leading to significant price growth that has outpaced general inflation. This recovery is a testament to the resilience and enduring demand in the residential real estate sector, according to Anarock.
Conclusion
The continuous rise in residential real estate prices, coupled with the market’s recovery post-pandemic, underscores the robust growth and strong demand within the sector. As the market continues to evolve, these trends highlight the attractiveness of residential real estate as a lucrative investment option.