Guest Blog- Price Difference Of Ready and Under-Construction Homes Lowest Ever at 3-5% in Q1 2021
The price gap between ready and ‘off plan’ or under-construction housing has been narrowing y-o-y since 2017 across the top 7 cities. Latest ANAROCK data reveals that the price gap between ready-to-move-in (RTM) and under-construction (UC) homes reduced to a mere 3-5% by Q1 2021. In 2017, the difference between the two categories was anywhere between 9% to 12% across cities, while in 2018 it was 5-8%.
Cities with Least & Highest Price Difference in Q1 2021:
- NCR and MMR recorded the least price difference between RTM and UC homes at 3%. The average prices of RTM homes in NCR were INR 4,650 per sq. ft. while for UC homes it was INR 4,500 per sq. ft.; in MMR it stood at INR 10,700 per sq. ft. and INR 10,350 per sq. ft. respectively.
- Pune, Hyderabad, and Chennai have the highest RTM/UC price difference at approx. 5%
- In Bengaluru and Kolkata, the difference is just 4%
“Previously, buyers of under-construction homes had one major advantage,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “Their patience and willingness to court construction risk were rewarded by notably lower prices. However, construction delays and stalled projects had a predictable outcome, and risk-aversion set in, with demand tilted heavily towards ready properties. While the fact that RTM homes do not attract GST has been an added attraction, even the price gap between RTM and UC homes has eroded substantially – from 9-12% in 2017 to just 3-5% by Q1 2021.”
The shrunk price gap works well for end-users as well as investors. End-users can see what they buy and save rent by moving in immediately, while investors focused on steady rentals can start earning right away. In the past four years, developers have been reluctant to increase the prices of ready homes as they need to clear their inventory. Not surprisingly, ready homes are the ‘in’ thing.
Av. Price Difference b/w RTM and UC Homes – 2017 vs Q1 2021:
- MMR has seen the highest reduction in the gap over the last four years. In 2017, the gap b/w RTM and UC homes in MMR was 12% – among the highest. Now, in Q1 2021, it has reduced to just 3% – the lowest.
- Bengaluru comes next – in 2017, the price gap b/w RTM and UC homes was 12%; as of Q1 2021 it has shrunk to 4%
- In Pune, the price gap in 2017 also stood at 12% while in Q1 2021, it has reduced to 5%
- In NCR, the price gap in 2017 was 9%; as of Q1 2021, it is just 3%
- In Hyderabad, the price gap was 10% in 2017 while in Q1 2021, it is down to 5%
- In Chennai, the price gap in 2017 was 9%; in Q1 2021, it has come down to 5%
- In Kolkata, the price gap between the two categories reduced from 10% in 2017 to 4% in Q1 2021
| Year 2017 | |||
| City | Avg. RTM Prices/sq. ft. | Avg. UC Prices/sq. ft. | % Diff. RTM vs UC |
| NCR | 4,413 | 4,036 | 9% |
| Kolkata | 4,200 | 3,832 | 10% |
| MMR | 10,365 | 9,251 | 12% |
| Pune | 5,539 | 4,933 | 12% |
| Hyderabad | 3,965 | 3,600 | 10% |
| Chennai | 4,887 | 4,503 | 9% |
| Bangalore | 4,889 | 4,365 | 12% |
Source: ANAROCK Research
| Q1 2021 | |||
| City | Avg. RTM Prices/sq. ft. | Avg. UC Prices/sq. ft. | % Diff. RTM vs UC |
| NCR | 4,650 | 4,500 | 3% |
| Kolkata | 4,465 | 4,300 | 4% |
| MMR | 10,700 | 10,350 | 3% |
| Pune | 5,650 | 5,360 | 5% |
| Hyderabad | 4,290 | 4,075 | 5% |
| Chennai | 5,000 | 4,775 | 5% |
| Bangalore | 5,130 | 4,910 | 4% |
Source: ANAROCK Research
MMR & Bengaluru – Maximum RTM/UC Price Gap Reduction
- MMR – 12% to 3% – The avg. prices of RTM homes were INR 10,365 per sq. ft. in 2017, and those of UC homes INR 9,251 per sq. ft. In Q1 2021, the prices were INR 10,700 per sq. ft and INR 10,350 per sq. ft. respectively.
- Bengaluru – 12% to 4% – In 2017, the average prices of RTM homes were INR 4,889 per sq. ft. while those of UC were INR 4,365 per q. ft. In Q1 2021, it is at INR 5,130 per sq. ft. and INR 4,910 per sq. ft. respectively.
About the author- Anuj Puri, Chairman – ANAROCK Property Consultants