Hyderabad housing sales plummet by 44% amid escalating prices, affordability crisis grows

HYDERABAD: Hyderabad’s housing market witnessed a sharp 44% drop in new housing launches and a 22% decline in sales in the third quarter of 2024, as rising property prices severely impacted affordability, particularly for middle-income buyers. According to the latest ANAROCK report, only 12,735 residential units were sold during Q3 2024, a significant decline from 16,375 units in the same period last year.

The report highlights that Hyderabad recorded the steepest price hike among India’s top seven cities, with a 32% increase in property prices year-on-year. The average price per square foot surged to ₹7,150 in Q3 2024 from ₹5,400 in Q3 2023, making homes increasingly unaffordable for many potential buyers. This affordability crisis has been driven by the overwhelming dominance of luxury and premium housing in the city. In Q3 2024, 97% of new residential supply was in the premium, luxury, and ultra-luxury segments, priced above ₹80 lakh, leaving middle-income buyers with very limited options.

The decline in new housing launches has been equally severe. Hyderabad saw only 13,890 new units launched in Q3 2024, a steep 44% decrease from 24,900 units in Q3 2023. Developers have been shifting their focus towards high-end projects, contributing to the mismatch between supply and demand in the affordable housing sector.

Commenting on the situation, Anuj Puri, Chairman of ANAROCK Group, said, "The sharp rise in property prices and the shift towards luxury housing have widened the gap in the market. Hyderabad, once an affordable destination for homebuyers, is now out of reach for many middle-income buyers. The drop in new launches and sales is a direct result of this affordability crisis."

Hyderabad has long been an attractive real estate market due to its relative affordability compared to other major cities such as Mumbai and Bengaluru. However, the recent surge in property prices has eroded this advantage, particularly for first-time buyers. Many prospective homebuyers who previously could afford mid-segment homes now find themselves priced out of the market.

The report further revealed that Hyderabad's housing sales drop was part of a broader trend affecting India’s top seven cities, where sales collectively fell by 11% year-on-year in Q3 2024. Across these cities, approximately 1,07,060 units were sold in Q3 2024, down from 1,20,290 units in the same quarter last year. However, Hyderabad experienced a more pronounced decline due to its significant price hikes and reduced supply of affordable homes. Cities like Bengaluru and Pune also saw declines, with Bengaluru experiencing an 8% drop in sales and Pune seeing a 17% decrease.

Despite the ongoing slump, the upcoming festive season (October to December) may provide some relief. Historically, this period has seen an uptick in real estate activity, and developers are expected to roll out offers, discounts, and incentives to attract buyers. However, Puri cautioned that high property prices could continue to deter buyers in the mid and affordable segments. "The festive quarter may see a slight increase in demand, but unless prices stabilize and more affordable housing options are introduced, the market is unlikely to see significant recovery."

Hyderabad's real estate market now faces the challenge of balancing luxury supply with affordable demand. While high-net-worth individuals and investors continue to drive demand for luxury housing, the limited availability of affordable homes has left a large section of the population underserved. If the market is to recover, developers may need to recalibrate their focus towards middle-income buyers, who have traditionally been a key driver of Hyderabad's housing sector.

The future of Hyderabad’s real estate market remains uncertain. Much depends on whether developers and policymakers can address the affordability crisis and create opportunities for all segments of homebuyers.