Housing sales in Mumbai likely to grow 8-9% in FY24

The average selling prices in MMR have increased at a CAGR of 4.3% between FY20 and FY24

Mumbai: The housing sales in the Mumbai Metropolitan Region (MMR) will grow by 8-9 per cent YoY in FY2024, supported by continued end-user demand and healthy affordability, an Icra estimate says.

The MMR is the largest residential real estate market among the top seven cities in India, accounting for 25 per cent of the area sold in FY2023 and is expected to maintain its leadership position in FY24. The top seven cities include Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru, Hyderabad, Pune, Kolkata, Chennai.

The healthy residential sales and calibrated launches resulted in a decadal low unsold inventory of 182 msf as of June 2023 and represented 28 per cent of the total unsold inventory in the top seven cities.

Giving more insights, Tushar Bharambe, Assistant Vice President and Sector Head, ICRA, said: “During FY23, the overall sales in the MMR market (151 msf) outstripped the fresh launches added during the year (141 msf), with a replacement ratio of 0.9 times. Icra estimates the replacement ratio to remain around one time in FY2024. The sustenance of healthy sales velocity along with the calibrated launches led to a significant improvement in years-to-sell to 1.2 years as of June 2023 from 2.8 years in June 2020. The credit rating agency expects the new launches in MMR to be around 145 msf in FY2024, while the years-to-sell is expected to remain around 1-1.2 years as of March 2024.”

The average selling prices in MMR have increased at a CAGR of 4.3 per cent between FY2020 and FY24, which is lower than average rise in prices of the top-seven cities at 6.6 per cent during this period. The extended Central Suburbs accounted for the largest share (23 per cent) of unsold inventory in MMR; however, this region has also seen the maximum activity in the MMR market in FY23 and was the highest contributor to new launches (23 per cent) and sales (25 per cent).

The average selling prices in Central Suburbs were stable and the extent of increase in Extended Central Suburbs and Thane was modest within the MMR, given the sizable availability of marketable supply and competitive intensity in these regions. These three regions have accounted for 45-48 per cent of the total available supply in the MMR market between FY2021 and Q1 FY24. Icra expects the average selling prices to increase by 3-5 per cent in FY24 in the MMR market.

Commenting on the trend in preferences of home buyers, Bharambe added: “The housing sales (in msf) in the MMR market seems to be predominantly leaning towards homes in the middle-income segment with the ticket size ranging between Rs 1 to 3.5 crore.”

This segment has seen a steady gain in its share in the overall sales to 35 per cent in Q1 FY24 from 26 per cent in Q4FY20.

The luxury segment (ticket size of above Rs 3.5 crore) has also witnessed an increase in its share to 10 per cent from 7 per cent during the same period. Icra expects the trend in sales of mid-income and luxury segments to continue with aspiration for home ownership and upgrade among buyers.