Why are house prices and rents increasing rapidly in Delhi and NCR?

Delhi-NCR’s real estate market has seen a significant growth in the last one year compared to other metro cities including Mumbai, Chennai, Bengaluru, Kolkata and Hyderabad, according to a recent survey.   Delhi-NCR witnessed a sharp 16 per cent rise year-on-year in the March 2023 quarter in the prices of residential properties, according to a report released by CREDAI, Colliers and Liases Foras.

On the other hand, among the top 8 cities Kolkata and Bengaluru followed closely with 15 per cent and 14 per cent rise in the prices of residential properties, respectively.

India’s top eight cities including Delhi-NCR, Bengaluru, Ahmedabad, Pune, Hyderabad, Chennai, Kolkata, and the Mumbai Metropolitan Region experienced an overall 8 revealed rise in housing prices during the first quarter of 2023, the report revealed.

At the same time, rental prices for residential properties have also increased exponentially, the report revealed.

Factors behind rising housing prices in Delhi-NCR

The robust development of infrastructure, particularly in the micro-markets of Noida and Gurugram, has played a major role in the boom of Delhi-NCR’s real estate market. This boom comes after the sluggish trend in the last few years.

Prices are being driven up by the present surge in home sales. The availability of quality projects in the market, and the presence of reliable developers have facilitated a favourable market. The red-hot real estate market can be analysed from the fact that housing prices increased by 59 per cent in the Dwarka Expressway area, mainly driven by the opening of the central peripheral road and the loop connecting Dwarka Expressway with NH-8. Meanwhile, Gurugram’s Golf Course Road saw a price rise of 42 per cent year-on-year, according to the report.

Interestingly, the consistent demand has shown no signs of abating despite the exorbitant housing prices. Due to the pause in the rising repo rate and a healthy macroeconomic outlook, Delhi-NCR’s real estate market is not expected to cool down anytime soon.

Rising housing rentals in Delhi-NCR

Reports suggest that rents for homes in Delhi-NCR have jumped  up to 40 per cent over the past year. Rents for homes in Noida and Gurugram are soaring primarily due to lack of supply and increased demand from companies asking employees to return to offices.

During the Covid-19 pandemic, rents in Delhi-NCR had declined due to a shift in demand as many people relocated to their hometowns. But after the pandemic receded, the resumption of full office hours and new hiring trends have increased demand not only for new housing but also for rental housing in Delhi-NCR.