India climbed 18 spots up to 14th rank in the global house price index in Q3 2023. Home prices in the country increased 5.9% year-on-year in the third quarter of 2023, according to the Knight Frank’s Global House Price Index.
Globally, house prices remained robust in the face of higher debt costs, with average prices across the 56 markets covered by the Knight Frank’s Global House Price Index growing at an average of 3.5% YoY in September 2023, up from 2.2% in the previous quarter.
The Global House Price Index tracks nominal and real price growth across 56 countries in local currencies.
The growth in India’s residential market, despite the challenges of higher home loan rates as well as threats of inflation, has largely been the result of stable economic growth which has lent itself to providing greater financial security to end-users. Furthermore, at the onset of the pandemic, central and state governments adopted steps to boost home sales through sops to home buyers, which triggered the market leading to acceleration in sales, the report noted.
“In light of an increased interest cost environment stemming from heightened inflation levels, the robust domestic economic fundamentals, and the escalating aspirational attributes of residential real estate, are driving heightened demand among homebuyers in prominent residential markets within the country,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Annual global house prices continue to rise despite rising interest rates which have been the central banks’ primary weapon to combat elevated inflation levels globally. Average annual price growth stands at 3.5%, closely approaching the pre-pandemic ten-year average of 3.7%. Among the 56 markets monitored, 35 experienced annual price growth, while 21 witnessed price declines.
Turkey has held the top spot in the rankings since Q1 2020 and once again sees the strongest growth on our ranking with an annual (89.2%) and quarterly (18.1%) increase. The south-eastern corner of Europe dominates the top five spots of our rankings, with Greece (14.0%), Croatia (13.7) and North Macedonia (11.0%) all showing robust annual growth.
Japan is the standout performer in the Asia-Pacific region, with 6.3% annual growth, followed by India with 5.9% annual growth.
“The resilience of global house prices is surprising in light of rising costs for mortgage borrowers, however strong savings, above inflation pay settlements and low supply of stock for sale are all acting as market supports,” said Liam Bailey, Global Head of Research, Knight Frank.
The big issue for housing markets in 2024 will remain low market liquidity, with sales volumes down by up to a quarter compared to their recent peaks- only a shift to lower interest rates will lift sales activity, he added.