Latest News
Bengaluru, Delhi, Mumbai, Hyderabad and Pune will be among the top 15 fastest growing urban centers by 2033: Savills
Date: Dec 1, 2024
Hyderabad has long been a real estate hotspot in India, and it is celebrated for its robust IT industry, modern infrastructure, and attractive investment opportunities. However, recent data suggests a shift in this upward trend, with the city experiencing a significant dip in real estate sales.
Hyderabad’s previously thriving housing market encountered a rough patch in the third quarter of 2024, with sales dropping by 16% from the previous quarter. This resulted in 12,700 units sold, and a rising inventory of unsold properties affected the market’s outlook, as per the latest report from ANAROCK Property Consultants.
The decline was even more pronounced on a year-over-year basis, with transactions falling by 23%, marking the most significant sales downturn among India’s top seven cities.
A Closer Look at the Decline in Sales and New Project Launches
West Hyderabad accounted for a significant portion of total sales, capturing 54% of the market; however, demand declined even in these prominent areas. In contrast, North, South, and East Hyderabad lagged behind, with respective market shares of 28%, 13%, and 4%. Across all regions, sales experienced decreases ranging from 3% to 26%.
According to PropEquity, a data analytics firm, Hyderabad experienced a 54% decline in new housing launches and a 42% drop in sales from July to September, marking the highest decreases among major metropolitan areas in India.
The report highlights that the city recorded 25,370 new housing launches in the same quarter last year, which fell to just 11,601 this year. Sales figures mirrored this trend, with 20,658 units sold in the July-September period of 2023, compared to only 12,082 units sold this year.
Adding further insight, data from PropEquity, a leading real estate analytics platform, shows an even steeper 42% decline in home sales in the July-September quarter, marking Hyderabad as the city with the highest drop among major urban centers in India.
Sales volumes decreased from 20,658 units in the same quarter last year to 12,082 units in 2024.
These statistics highlight a concerning trend, suggesting that the once-thriving real estate market in Hyderabad is undergoing a cooling phase.
Key Factors Behind the Real Estate Slowdown
Understanding the reasons behind this downturn requires a closer examination of economic, regulatory, and market dynamics:
1. Economic Uncertainty
Economic conditions play a significant role in the real estate market, and Hyderabad’s current dip in sales is partly attributed to broader economic uncertainties. Rising inflation, interest rate hikes, and fluctuating global economic indicators have made both individual buyers and investors more cautious. Many are delaying their purchasing decisions, hoping for more favorable conditions.
2. Regulatory Challenges and Crackdowns
The Hyderabad Disaster Response and Asset Monitoring and Protection Agency (HYDRA) has recently intensified its actions against unauthorized constructions and non-compliant developments. While these regulations aim to ensure transparency and safety in real estate transactions, they have also introduced an element of risk and uncertainty. Buyers and developers alike are now more vigilant, adding a layer of complexity to property transactions and development approvals.
3. Rising Property Prices and Reduced Affordability
Property prices in Hyderabad have risen steadily over recent years, averaging around a 20% increase across major metropolitan areas. While this growth reflects the city’s economic potential, it also places additional pressure on affordability. With prices reaching new highs, many middle-income and first-time buyers find it increasingly challenging to afford properties in desirable areas, contributing to a 5% year-on-year decline in overall sales.
4. Shift in Buyer Preferences
Post-pandemic, buyer preferences have shifted, with more individuals now seeking larger homes in suburban areas or secondary cities that offer better value for money. As a result, Hyderabad’s urban core has experienced lower demand compared to emerging residential neighborhoods and fringe areas. While beneficial for surrounding towns, this trend has reduced the immediate demand for properties within Hyderabad.
Immediate Impact on the Real Estate Market
The downturn has had a cascading effect on the overall market dynamics, affecting sales, unsold inventory levels, and developer strategies.
1. Increase in Unsold Inventory
Hyderabad now has a surplus of unsold inventory, with more than 101,000 units currently on the market—up 13% from the previous year. This inventory overhang increases pressure on developers to adjust their pricing strategies, offer additional incentives, or delay new launches until demand stabilizes. A high level of unsold inventory clearly indicates that supply is outpacing demand, which can negatively impact prices in the short term.
2. Strain on Developers and Financial Institutions
The market slowdown has put significant financial strain on developers, especially those who have invested heavily in upcoming projects. Many developers may need to delay or scale back on new launches to prevent further inventory build-up. Additionally, financial institutions and lenders are closely monitoring the sector’s performance, as rising inventory and slower sales could impact repayment schedules for real estate loans.
3. Market Adjustments and Price Corrections
The combined effects of decreased demand, unsold inventory, and economic uncertainty could prompt price adjustments in the coming months. As developers seek to attract buyers in a highly competitive environment, homebuyers may see more flexible payment plans, reduced prices, or additional perks.
The Road Ahead: Signs of Optimism Amidst Challenges
While the current situation may appear challenging, there are reasons to be cautiously optimistic about Hyderabad’s real estate market.
Here’s what could contribute to a potential recovery:
1. Festive Season Stimulus
The festive season traditionally brings a surge in real estate activity, with developers offering discounts and buyers looking to invest during this auspicious time. The increased foot traffic and sales during the festivals could help reduce unsold inventory and boost market sentiment.
2. Infrastructure and Government Initiatives
Hyderabad’s ongoing infrastructure projects, such as expanding the metro and new highway corridors, are expected to improve connectivity and accessibility in the coming years. Additionally, government policies promoting affordable housing and encouraging foreign direct investment (FDI) in the real estate sector may also stimulate demand and investment, particularly in emerging areas.
3. Tech Sector and Job Market Resilience
Hyderabad’s tech and IT sectors continue to thrive, and the steady growth in employment opportunities is a positive sign for the real estate market. As the job market strengthens, so does the demand for quality housing, especially among young professionals and families moving to the city for work.
4. Growing Interest in Suburban Areas
With an increasing number of homebuyers looking beyond the city’s core, suburban and satellite areas around Hyderabad are expected to see a rise in demand. Areas like Kompally, Pocharam, and Adibatla are gaining popularity, offering affordable housing options with good connectivity. This shift may balance the demand, ensuring sustained growth in Hyderabad’s real estate sector over the long term.
Sources:
-
PropTiger: Hyderabad housing market witnessed 19% sales drop and 58% decline in new launches
-
Times of India: Hyderabad Real Estate Market Faces 42% Decline in House Sales
