Property Prices Grow In June 2024- The value of unsold inventory has increased from Rs 49,423 cr to Rs 61,849 cr due to price and inventory increases. 4 July 2024: According to a research average property prices increased by 8.92% over the previous year to reach a lifetime high of Rs 6,298 per square foot (sqft) in June 2024. According to the survey, while the increase in housing prices from January to June 2024 has affected affordability, it is also pushing purchasers towards more reputable developers.
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The biannual report, which was published between June 2023 & June 2024, states that throughout the previous ten years, Pune has seen an increase in both the quantity and average size of projects that are now under construction. Projects that are currently in development demonstrate a noteworthy 9.61% increase following a 10-year low in June 2023. In the Pune region, 3,12,748 units were under development as of June 2024. Compared to June 2023, when there were 3,04,688 units of apartments under development, there has been a 2.65% rise. Over the ten years between June 2014 and June 2024, the average project size increased by 44%, from 89 flats to 128 apartments. The data indicates that developers are continuing to launch homes with an average size of 1,238 square feet, indicating a preference for larger residences.
About Real Estate Market
Although the real estate market is still performing well, the 8.92% increase in home prices and the rise in home sizes brought about by homes larger than 1,400 square feet are beginning to have an impact on client affordability. From 3.79x yearly income in June 2020, five years ago, affordability has decreased to 3.98x annual income. Even if affordability is still strong and is not even close to its top at 5.30, it is evident that pressure is being applied to it. This is seen in the sales volume, which has decreased by 3.6% over the previous 12 months. The replacement ratio of 1.05 signifies a 5% increase in new supply relative to sales.
However, the market is moving towards low-risk delivery, which is a quality of developers with a strong brand and also propels the ability of credible developers to take on big projects. This is indicated by the demand for near-ready and ready inventories. This underlines the market consolidation tendency that is still in place. A slight drag on overall sales momentum, abandoning caution, is shown by the increase in inventory overhang years from 8.7 months in June 2023 to 9.7 months in June 2024.
Since June 2023, projects under development expanded by 9.61%: inventory value at Rs 61,849 crore.
In June 2024, there were 2,441 under-construction projects, compared to 2,227 in June 2023, a 9.61% increase, according to the data. The value of unsold inventory increased from 49,423 crore in June 2023 to Rs 61,849 crore in June 2024 due to higher pricing and inventory. There were 3,12,748 flats under development in the Pune region as of June 2024, up 2.65% from 304,688 units in June 2023. The overall number of projects has decreased by 35% from 3,733 in June 2017 to 2,441 in June 2024, despite a decline of 4.56% from the high.
Between June 2023 and June 2024, the total inventory value that was up for sale grew by 25%, from Rs 49,423 crore to Rs 61,849 crore.
A 7.3% increase in inventory to 75,598 units is available for purchase
According to the report, in June 2014, there were 66,683 units of total inventory for sale, of which 23% were near-ready and ready-stage inventories. Following the ready-stage inventory at 2,384 units, down from 7,498 units in June 2014, this has fallen to a 10-year low of 4.5% of 75,598 units by June 2024.
On the other hand, early-stage inventory, which represents a customer desire for lesser delivery risk, is at a five-year high of 25,016 units, up from 19,116 units in June 2019. From a peak of 9,005 homes in June 2018 to 2,384 homes in June 2024, the ready inventory fell 74%, while the near-ready stage inventory fell from 3,691 homes to 1,000 homes.
Highest rate of increase in new project home prices
In the past 12 months, the average price of a home has increased by 8.92% throughout the city, primarily due to new construction, where prices have increased by as much as 15.39%. As a result, over the previous 24 and 36 months, the rate increase has been 19.95% and 28.06%, respectively. Prices have increased at a compound annual growth rate (CAGR) of 7.9% since 2019 when they peaked, hitting Rs 6,298 per square foot in June 2024 from Rs 4,644 in June 2020.
With prices rising at a CAGR of 8.3% from Rs 5,460 per sqft in June 2020 to Rs 7,499 per sqft in June 2024, new projects have experienced the greatest price growth. New phases and ongoing projects are also catching up, with CAGRs of 6.91% and 7.2%, respectively.
With a compound annual growth rate (CAGR) of 7.58%, the Premium Plus segment saw the most price increase of any segment, going from Rs 6,205 per square foot in June 2020 to Rs 8,310 per sq foot in June 2024. This segment is the most appealing to customers because it gives value for money and is 33% less expensive than the luxury segment while yet being almost as aspirational.
The number of new launches in Pune rises by 5.8% annually, with PCMC accounting for 42% of all new launches.
Over the previous 12 months, the number of new home launches increased by 5.8% to 99,166 units. The budget market (priced at Rs 5,081 per sqft or less) has witnessed the greatest number of new launches, with a notable 16.2% increase in releases.
A Zone 3 (Sinhagad Road, Ambegaon, Narhe, and Dhayari) has experienced the largest increase in new launches, with a 27% increase. Zone 1 (East Pune – Kharadi & Wagholi) has witnessed a 25% increase in launches. Zone 6 (PCMC) currently makes up 42% of all new launches in Pune, with Zone 4 (West Zone, including Balewadi, Baner, and Hinjewadi) coming in second with 21%.
Units sized 1,000+ sqft experience a 12% sales increase.
Sales velocity decreased by 3.6% over the previous 12 months, primarily due to a 19% decrease in units of 1,000 square feet or less. On the other hand, sales of units larger than 1,000 square feet increased by 12%, from 48,796 to 54,634 units, despite the fact that 27% of all newly launched apartments had three bedrooms, indicating a preference for larger homes. With a 37% growth, the 1,401+ sqft sector now accounts for 21% of total sales. Sales fall inside the 801–1,200 sqft range 52% of the time. The average home size of apartments offered in new developments is currently 1,238 square feet with a carpet area of 917 square feet, however this number is still rising.
Consumer preference for larger developers with a strong brand continue.
Large projects (>500 units) are still in demand; at the moment, 189 projects make for 13% of the 3,12,748 units that are being built at various levels. This figure has significantly increased over time; in June 2018, it was only 8%. In June 2024, there were 1,362 small projects (100 units or less), a 44% decrease from 2,433 in June 2018.
This change underscores the desire of customers for reliable developers, increasing the demand for big projects. According to the survey, the number of projects selling more than 500 units increased from 1 eight years ago to 11 last year.
In addition, sales volume has decreased by 3.6% during the previous 12 months. Although the Replacement Ratio is 1.05, meaning that the amount of new supply is greater than sales by 5%, the PremiumPlus and Luxury segments have seen significant improvements in the Inventory Overhang (from 16.26 months in 2018 to 7.23 months in 2024) as well as 20.59 months in 2018 to 10.22 months in 2024).
Prices have continued to rise spectacularly over the past 12 months, which has reduced affordability to 3.98 times yearly income. The majority of purchasers can still afford homes, despite the fact that the pressure on affordability is far from what it was at the top of 5.30.
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