Real estate sales skyrocket with 11% price surge in Q3 2023

Real estate sales: The country's residential real estate market continued to grow in Q3 2023, with sales volumes reaching 82,612 units and prices surging by 11 per cent in specific markets, despite global economic challenges, according to Knight Frank report.

In a display of recovery and sustained demand, the residential market witnessed a 11 per cent year-on-year (YoY) increase and a 7 per cent rise compared to the previous quarter, marking the highest quarterly sales volumes in nearly six years. This upward trend extended to all major markets, with the National Capital Region (NCR) leading with a 27 per cent YoY growth, while Kolkata stood out with a staggering 105 per cent YoY increase. Pune also reported strong growth at 20 per cent YoY, while other markets experienced steady single-digit growth.

Residential real estate market thrives in Q3 2023, records 82,612 units sold | Image credit: Pexels

Shift towards premium properties

Data reveals a shift in consumer preferences towards higher ticket-size properties, as 35 per cent of sales in Q3 2023 belonged to the Rs 10 million and above category, up from 28 per cent a year ago. This change reflects a growing desire amongst homebuyers for larger living spaces with improved amenities. Meanwhile, the Rs 5-10 million categories remained stable at 36 per cent, while the Rs 5 million and below category declined from 36 per cent in Q3 2022 to 29 per cent in Q3 2023, primarily due to rising prices and home loan rates.

Robust supply levels

Developers responded to the sustained demand by adding 85,549 units to the market in Q3 2023, indicating a 23 per cent YoY increase in supply. This influx of supply consistently outpaced the rate of sales, underscoring the market's overall health.

Price levels mirrored the demand surge, with increases observed across all real estate markets in YoY terms. Hyderabad experienced the most significant price hike at 11 per cent YoY, signalling a growing focus on premium high-rise properties in the city.

Average age of inventory declines

Data reflects a shift in consumer behaviour as homebuyers increasingly favoured ready or nearly ready inventory to minimise completion risk. This change is evident in the decrease in the average age of inventory, which dropped from 17.6 quarters to 16.1 quarters in Q3 2023.
Despite an 8 per cent YoY increase in unsold inventory levels, the market's health remains resilient. The Quick Time to Sell (QTS) level, currently at 6.5 quarters, significantly improved from 7.1 quarters a year ago, indicating growing demand despite the rise in unsold inventory.