Despite rate hikes, home sales surge to nine-year high, prices set to rise further in 2023

Despite the Reserve Bank of India raising policy rates by a cumulative 225 bps in 2022, residential demand in India not only remained resilient but surged to a nine-year high in terms of annual sales in the year, shows data analysed by real estate consultancy firm Knight Frank
"H2 ( second half ) of 2022 is second only to H1 2022 in terms of being the half-yearly period with the highest sales in nine years," said the report.
Heightened savings during the lockdowns, relatively little income disruption in the mid and high-income categories and a comparatively strong economic growth outlook have sustained demand in the Indian residential market, it added.
The 153,961 units sold during the second half of 2022 constitute a 15% year on year growth in volume.
While sales remain robust during the period, prices have also grown in the range of 6.8% to 7% YoY across Bengaluru, Delhi and Mumbai. This also marks the second consecutive half-yearly period of YoY growth in prices across all markets.
In fact, Knight Frank's Asia-Pacific Residential Review Index for H2 2022 shows that Mumbai and Bengaluru have found place in the top 5 best performing Asia-Pacific residential markets in terms of annual price growth in H2 2022.
At least 14 out of 23 Asia-Pacific (APAC) cities have recorded positive annual price growth with Metro Manila ranked as the best-performing Asia-Pacific market with 24% year-on-year (YoY) growth.

Mumbai and Bengaluru shared the 4th position on the Asia-Pacific Residential Review Index as both registered a price growth of 7% YoY in H2 2022.
Delhi found place in the top 10 best performing APAC markets with price growth of 6.8% YoY in H2 2022.
In the next twelve months, Bengaluru’s residential prices are expected to grow in the range of 3%-5% while Mumbai and Delhi’s residential prices are expected to grow in the range of 3%-4% and 2%-3% respectively.
“Despite the further 25 bps hike by RBI in February 2023, India’s inherent economic strength and healthy affordability levels will be the prime factors that will support the residential market in the next 12 months," said Shishir Baijal, Chairman & Managing Director, Knight Frank India.