Upward Surge Continues

However, it must be noted that the base periods in both cases were at multi-year highs. NCR has historically been among the more speculative markets with a relatively higher quantum of investment interest. Coupled with very low inventory levels in mid and affordable categories in the right locations, this weighed down sales in the market. However, the top end of the market with units priced in the ` 20-200 mn range continues to grow at a strong pace.

While sales have been ramping up since the pandemic, development activity has comfortably outpaced sales since 2022 as developers looked to cash in on the rich vein of demand during this period. “The 0.37 mn units launched during the year represent an 11-year high in annual terms while the 0.18 mn units launched in H2 2024 scaled a similar high in terms of units launched in a half-yearly period. Developers have been well aligned with the changing preferences of the homebuyer looking for products that enable an upgraded lifestyle with more space, amenities and differentiated experiences,” noted the report.

The Shift Towards Premiumisation Continues

Homebuyer preferences are evolving rapidly, and this can be observed clearly in the ticket-size split of sales. Residential units priced over `10 mn constituted a massive 46% of the total sales in H2 2024 across all the eight markets. Sales in this segment have grown by 29% YoY and have been the primary driver for overall sales growth during H2 2024.

According to the Knight Frank report, while units priced in the ` 10-20 mn range constitute 27% of total sales growing by a healthy 15% YoY, it is the ` 20-50 mn range that shows the most growth at 62% YoY. Its share has grown from 10% in H2 2023 to 15% in H2 2024. “In fact, sales have grown in all higher ticket sizes with the exception of the ultra-luxurious segment priced over ` 500 mn. Similarly, volumes have also dropped in YoY terms in the sale of units priced under ` 5 mn and in the ` 5-10 mn segment,” noted the report.

While sales have seen healthy growth overall, the unsold inventory has consistently increased since 2020 as supply levels have exceeded sales. 39% of the inventory is concentrated in units priced under ` 5 mn. This is the most voluminous segment by far but inventory levels have been dropping here despite falling sales as supply levels have fallen by an even greater extent.

The higher ticket sizes have largely displayed the opposite trend with sales growing but it has been consistently dwarfed by supply over the past two years. “Inventory levels in the higher ticket sizes, particularly those in the ` 20-50 mn and ` 50-100 mn, have grown by 54% and 52% YoY respectively and warrant a closer look in terms of an assessment of whether the market is approaching bubble territory or a potential correction,” noted the report.