Housing sales in the National Capital Region (NCR) dropped by 7% during July-September 2024, as a shortage of homes priced below Rs 1 crore and increasing home prices impacted the market, according to data from Knight Frank India. The region recorded 12,976 housing units sold in Q3 2024, compared to 13,471 in Q2 and 15,907 in Q1, reflecting a significant 16% drop from the beginning of the year.

Supply Shortage in Affordable Housing

The decline in sales is largely attributed to a lack of inventory in the under Rs 1 crore price segment, especially in areas like Gurgaon and Greater Noida. Homebuyers are being pushed towards higher-priced properties due to limited availability in the more affordable segment, according to Vivek Rathi, head of research at Knight Frank India.

Shift Towards Premium and Luxury Segments

Most of the new housing supply in the NCR is focused on premium and luxury properties priced above Rs 1 crore. Homes previously priced at Rs 90 lakh are now listed for over Rs 1.1 crore, further affecting demand in the mid-segment. Experts suggest the market will only recover when prices decrease or a substantial increase in inventory under Rs 1 crore occurs.

National Decline in Mid and Affordable Housing

Across India, the affordable housing segment (under Rs 50 lakh) saw a 14% decline in sales for the July-September quarter, while the Rs 50 lakh to Rs 1 crore segment recorded a 13% drop. In contrast, the premium segment (above Rs 1 crore) experienced a 41% year-on-year growth, driving overall sales in the residential market.

Rising Home Prices and Mortgage Rates

NCR home prices increased by 4% year-on-year to Rs 4,835 per sq ft in the first half of 2024, similar to price trends in Mumbai. Rising home prices, coupled with mortgage rate hikes of 150-200 basis points, have particularly impacted first-time buyers, forcing them to delay purchasing decisions and await market corrections.