The residential real estate market in major IT hubs like Hyderabad, Pune, and Bengaluru is experiencing a downturn, with significant declines observed in sales volumes during the current quarter, according to data from PropEquity. Hyderabad and Pune have recorded the steepest declines among the top cities, with sales plummeting by 20% and 15%, respectively.
In contrast, Bengaluru has managed to maintain flat sales figures, indicating a stagnation in growth compared to the previous quarter when it saw a modest increase of 6%. Industry experts attribute this sudden downturn to a confluence of factors. Firstly, the aftermath of recent elections has introduced uncertainty, which typically impacts consumer sentiment and investment decisions in the real estate sector. Secondly, a surge in property launches in preceding quarters has saturated the market, resulting in a subdued demand in the current period. Additionally, the second quarter of the fiscal year is historically sluggish due to seasonal factors and business cycles. “There are several underlying causes contributing to the softening of housing sales in these cities,” noted a property expert. “Issues within the IT/ITeS sector, which is a significant driver of residential demand in these regions, have played a role. Furthermore, escalating property prices, particularly pronounced in Hyderabad and Bengaluru, have deterred potential buyers, especially in the mid-segment category.”
Over the past year, average residential prices in Hyderabad and Bengaluru have surged notably. Traditionally, demand in these cities has been strongest within the mid-segment housing range, typically priced between Rs 40 lakh and Rs 80 lakh. The sharp rise in prices has curtailed affordability, thereby dampening overall sales activity. Echoing these sentiments, a source associated with a real estate-focused private equity firm highlighted the doubling of property prices in Bengaluru and Hyderabad over the last four years. “The exuberance witnessed in these markets is now moderating, influenced significantly by the steep escalation in prices. Cities experiencing meteoric price rises are likely to witness a corresponding sharp decline in sales volumes,” the source added. As the real estate landscape navigates through these challenges, stakeholders anticipate policy interventions and market adjustments that could stabilize demand and restore growth momentum in the near future. Industry watchers emphasize the importance of adaptive strategies amidst evolving market dynamics to sustain investor confidence and consumer interest in the housing sector.
