In the last decade, the average property prices in the country’s top-seven cities witnessed a nearly 38% increase. However, the price growth has gradually stagnated in terms of inherent value size and location has caught up and the price-to-value ratio has been rising steadily. By ANAROCK RESEARCH
Across the world, the coronavirus pandemic has made homes the new focal point – for now, and very possibly also in the future. In an unlikely twist to the Indian real estate story, working from home is now at least partially juxtaposed against the commercial office narrative. As work commutes become less of a factor, and the ability of a home to double as a surrogate workplace is thrown into sharper relief.
Prashant Thakur, Director & Head, Research, ANAROCK Property Consultants says, “Homes are now the ultimate multitasking assets, and housing prices are once again centre stage. There is an increasing perception that it makes sense to own a property that one lives as well as works in. Property size now matters more than when home and office were distinctly separate concepts. While the question of affordability still looms large over most Indians’ homebuying decisions, property price growth has gradually stagnated. The value of a property, defined by size and location, is now distinctly higher. Also, while there is no denying the challenges presented by the current COVID-19 pandemic, India’s residential market now favours end-users.“
“This was not always the case. In earlier years, there were steep price growth spikes on account of speculative buying and selling. Homes previously were traded like commodities, severely hampering the options of genuine end-users.”
Price Growth: What Data Says
As per ANAROCK research, average property prices in the top seven cities in the last decade (2010-1Q 2020) saw a close to 38 per cent jump. The average price of a home in the top seven cities rose from approximately Rs 4,063 per sq. ft in 2010 to Rs 5,599 per sq. ft by 1Q2020.
Among the top seven cities, Pune saw the maximum rise of 67 per cent during the period. This was followed by Bangalore with a 49 per cent jump, and Hyderabad with 45 per cent.
The average prices in Pune were approximately Rs 3,300 per sq. ft in 2010 and rose to Rs 5,510 per sq. ft. in 1Q2020, a 67 per cent jump. Interestingly, contrary to trends in all other top cities, Pune prices saw lower growth of 52 per cent in the preceding decade of 2000-2009. In Bengaluru, average property prices stood at Rs 3,345 per sq. ft in 2010 and rose to Rs 4,975 per sq. ft in 1Q2020, a 49 per cent rise. In the 2000-2009 period, the city witnessed an 82 per cent jump. Hyderabad witnessed a 45 per cent increase in prices in the last decade, the average price in 2010 was Rs 2,897 per sq. ft, increasing to Rs 4,195 per sq. ft in 1Q2020. In the 2000-09 period, the city witnessed a 65 per cent jump.
Kolkata saw a 44 per cent rise in average property prices, from Rs 3,050 per sq. ft in 2010 to Rs 4,385 per sq. ft today. In the 2000-09 period, the city’s prices rose by 58 per cent. The Mumbai Metropolitan Region (MMR) saw a 33 per cent increase in property in the last decade. The average price recorded in the region in 2010 was Rs 7,965 per sq. ft, while in 1Q2020 it had increased to Rs 10,610 per sq. ft. In the 2000-09 decade, the city saw a whopping 67 per cent jump, the highest among all cities. Chennai saw average price rise by nearly 20 per cent in the 2010-1Q2020 period. The average price recorded in the city in 2010 was Rs 4,100 per sq. ft, while in 1Q2020 it had increased to Rs 4,935 per sq. ft. In the 2000-09 period. The city witnessed a 62 per cent jump.
Interestingly, NCR saw the least increase in property prices – by 19 per cent between the 2010-1Q2020 period. The average price recorded in the region in 2010 was Rs 3,850 per sq. ft while in 1Q2020 it had increased to Rs 4,580 per sq. ft. In the 2000-09 period too, the city witnessed the least price rise of 34 per cent. In the initial five-year period between 2010 to 2014, average property prices increased by anywhere between 5-7 per cent YoY. Thereafter, growth began to slow down significantly, ranging between 0-2 per cent.
However, in the decade between 2000-09, average property prices jumped by almost 52 per cent, from Rs 2,490 per sq. ft in 2000 to Rs 3,784 per sq. ft in 2009. In contrast, the growth in average prices between 2010 to present is approximately 38 per cent.
Avg.Price Change 2010-1Q2020
in 2010 (Rs/sq. ft)
Avg. prices in Q1 2020 (Rs/sq. ft)
Avg.Price Change 2000-2009
Avg. prices in 2000 (Rs/sq. ft)
Avg. prices in 2009 (Rs/sq. ft)
Speculative price growth has been significantly curtailed in the last decade. While the steep price increases of the preceding decade obviously favoured investors, they now account for less than 10 per cent of residential property buyers in India. In the current era, end-users are in the driver’s seat.
ANAROCK is among the leading real estate services companies in India with diversified interests across the real estate value chain.