Home sales, new supply improve in Q4 2020 amid festive season: PropTiger report


In the backdrop of a mild improvement in various economic indicators, new supply and sales in India’s eight prime residential markets showed an improvement in Q4 2020 over Q3 2020

The much-anticipated festive season that covers the period between October and December (Q4) has brought some relief to India’s housing market that has been reeling under the impact of the Coronavirus pandemic, according to a PropTiger.com report, ‘Real Insight: Residential Annual Roundup 2020’. The report, which analysed the performance of India’s eight prime residential markets during the last three months of 2020, showed that both, new supply and homes sales, registered a quarter-on-quarter (QoQ) improvement in the quarter ending December 31, 2020.

 

Yearly round-up of India’s top 8 residential markets in 2020

CityLaunches YTDSales YTDUnsold Inventory as on December 31, 2020Inventory overhang as on December 31, 2020 (in months) 
Ahmedabad7,68712,15638,61438
Bengaluru17,79323,45871,19836
NCR12,09417,7891,06,68972
Chennai12,38210,45236,60942
Hyderabad22,94016,40039,30829
Kolkata3,2889,06130,21040
Mumbai20,89954,2372,63,98758
Pune25,34339,0861,31,86840
Total1,22,4261,82,6397,18,48347

Source: Real Insight: Residential Annual Roundup 2020

 

New launches show quarterly, as well as annual improvement

With the launch of a total of 54,329 new units across the eight markets covered in the analysis, Q4 2020 witnessed a 173% Q0Q growth in new supply. The numbers also reflect a year-on-year (YoY) increase of 12%, when compared to the data for the corresponding period in 2019.

A city-wise break-up of launches also shows that in Q4 2020, there has been a quarterly increase in launches across markets, barring Ahmedabad. The highest number of units were launched in Hyderabad, Pune and Mumbai.

The affordable housing segment, i.e., housing units priced up to Rs 45 lakhs, continues to dominate the market, contributing 54% to the overall new supply, followed by the mid-segment with a 25% share.

In the entire 12-month period of 2020, however, a total of 1,22,426 were launched. This is half the new supply that filled the market in 2019 (2,44,256 units). Note here that new supply had been adversely affected, because of a multi-year slowdown in India’s housing markets, much before the Coronavirus pandemic aggravated the difficulties for the sector.

“The quarterly spike in supply numbers, could largely be attributed to the increased popularity of residential realty in the aftermath of the Coronavirus pandemic, which has laid bare the insecurities of other asset classes. Various government-offered support measures to provide a cushion to the developer community, have also provided some scope to launch new schemes,” the report says.

Hyderabad was the only city among the top eight cities that witnessed a positive YoY growth of 11% in 2020.

 

Click here to read the full report

 

Break-up of sales and launches in 8 cities in Q4 2020

CityLaunchesSales
Ahmedabad3,0033,125
Bengaluru6,1047,660
NCR5,1206,065
Chennai4,8873,180
Hyderabad12,7236,487
Kolkata1,6582,518
MMR10,07018,331
Pune10,76411,548
Total54,32958,914

Source: Real Insight: Residential Annual Roundup 2020

 

The festive season quarter, which happens to be the most crucial time for builders, in terms of sales, because of the traditional value attached to property purchases during the auspicious festivals of Navratri and Diwali, witnessed sales of 58,914 units across the eight cities. Even though it accounts for a 68% increase over the July-September period of 2020, an annual comparison of these numbers with the data for Q4 2019 shows a decline of 27%.

“All factors considered, the sector has shown remarkable tenacity in 2020, against unprecedented odds that have caused the economy to contract and impacted consumer spending. The fact that housing sales in India’s key markets have started to bounce back, in spite of the general gloom caused by the pandemic, shows the immense potential of the real estate sector, which employs the highest number of unskilled workers in the country. The sector’s performance seems particularly impressive, given that the pandemic has impacted the income-generating capacity of a large number of people. End-users and investors continue to feel confident about investing in real estate. Prices continued to remain stable and the overall outlook looks positive,” said Dhruv Agarwala, group CEO, Housing.com, Makaan.com and PropTiger.com.

Barring Ahmedabad, sales of houses increased across cities when compared to the preceding quarter. Housing units from the affordable category made up 48% of the overall sales numbers during the quarter-ended December 31, 2020. At 31% and 20%, respectively, Mumbai and Pune contributed the highest to the quarterly sales numbers, the report shows.

The report attributes the quarterly growth in sales numbers to the lucrative offers launched by the developer community, the interest rate reduction by the RBI and the stamp duty and circle rate cut by some states.

After the RBI lowered the repo rate to 4% through consecutive cuts, most Indian banks have brought their home loan interest rates to the sub-7% level. Maharashtra, Karnataka and Madhya Pradesh have also been prompt in lowering stamp duties on property registration, to provide an impetus to the residential sector in the aftermath of the pandemic, the report says.

For the full year of 2020, a total of 1,82,639 units were sold, showing a fall of 47% in comparison with the overall sales registered in 2019. This is also indicative of the long road towards recovery for the residential segment, in the aftermath of the virus spread that continues to be a concern, with India reaching the 10-million infections mark in December-end.

2BHK units remained the most-preferred configuration for both, buyers and developers, in Q4, with a 48% share in the total launches and a 45% share in total sales, closely followed by 3BHK units.

“While the trends point to a market recovery and positive news, given the imminent launch of a vaccine that will ease the pandemic concerns, our optimism should be cautious. Buyers continue to expect low home loan rates, extension of developer offers and prefer ready-to-move-in inventory than those under construction. We believe that the government should continue to support the sector, through moves such as lowering stamp duty, re-evaluating circle rates and increasing the tax deduction limit for interest on home loans, to ensure that the sector continues to revive. The sector is digitising at a rapid pace and more than 90% of potential home buyers have moved online, to shortlist properties to buy. We have seen a strong growth in online booking throughout 2020,” added Mani Rangarajan, Group COO, Housing.com, Makaan.com and PropTiger.com.

 

Inventory overhang increases amid slow sales velocity

Registering a 9% decline annually, the unsold housing stock in the eight cities stood at over 7.18 lakh units as on December 31, 2020. However, the average inventory overhang has increased to 47 months as of December 2020, as compared to 27 months in December 2019.  Inventory overhang is the estimated time builders should take to sell off the existing unsold stock, at the current sales velocity.

At 55% combined, while Mumbai and Pune continue to hold the highest share in the unsold stock, the inventory overhang is the highest in the NCR at 72 months. On the other hand, Hyderabad has the lowest inventory overhang of 29 months.

Mumbai had an unsold stock of 2.64 lakh units as on December 31, 2020, claiming a 37% share in the national inventory. Also, nearly 14% of this unsold stock in Mumbai falls under the ready-to-move-in category.

At 48%, the affordable housing segment contributes the highest to the national unsold stock. Also, nearly 19% of the total unsold inventory falls in the ready-to-move-in category.

 

Unsold stock: City-wise break-up

CityUnsold stock as on December 31, 2020 (units)Inventory overhang (in months)
Ahmedabad38,06938
Bangalore71,13336
Chennai35,58342
Hyderabad39,23429
Kolkata30,06040
MMR2,67,39858
NCR1,06,56072
Pune1,29,19940
National average7,18,48347

Source: Real Insight: Residential Annual Roundup 2020

 

Annual price growth in cities remains largely flat

Nationally, price growth for new projects remained flat, as people refrained from making big-ticket purchases due to the prevailing economic uncertainty. The average per sq ft price of new property in India stood at Rs 6,042, showing flat annual growth in Q4 2020, over the same quarter of the previous year.

Property values of newly launched projects in mega cities in the one-year period also largely remained flat in most cities covered in the analysis, as demand-side concerns made appreciation difficult. However, Ahmedabad and Hyderabad stood as exceptions, where the annual per sq ft values of new property increased by 7% and 5%, respectively.

Owing to increasing construction costs amid a labour shortage, supply constraints and liquidity issues, growth of average prices has been flat in the NCR and MMR markets, the country’s two strongest housing markets.

 

Price growth: City-wise break-up

CityAverage price as on December 31, 2020 (in Rs per sq ft)Annual growth in %
Ahmedabad3,2137
Bengaluru5,3422
Chennai5,2282
Hyderabad5,6025
Kolkata4,2022
MMR9,448No change
NCR4,268No change
Pune5,0774
National average6,042No change

Source: Real Insight: Residential Annual Roundup 2020

 


Previous reports:

Sales and new launches improve in Q3 2020 but concerns remain: PropTiger report

Despite a quarterly increase in sales and new launches, both, demand and supply, are quite far from reaching their past levels, says a report by PropTiger

October 14, 2020: After hitting a record low level in terms of demand and supply, as the Coronavirus pandemic exacted its effect on the national economy during the April-June period of 2020, India’s residential real estate segment has seen some restoration of normalcy as the government started the phased unlocking of the system during the July-September (Q3) period of the calendar year 2020 (CY 2020). This is reflected in home sales and new launches during the quarter, according to Real Insight Q3 2020, a quarterly analysis of India’s eight prime residential markets by PropTiger.com.

According to the report, developers sold 35,132 units during the period between July and September 2020, an increase of 85% from the previous quarter. Playing an instrumental role in what seems like the signs of a slow recovery process, housing units in the sub-Rs 45-lakh price bracket (categorised as the affordable housing segment under income tax laws in India) made the biggest contribution to overall sales during the quarter, contributing 45%.

The eight markets covered in the analysis are Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, the Mumbai Metropolitan Region (MMR), the National Capital Region (NCR) and Pune.

A similar trend was visible in the supply side. Of the 19,865 new units launched during the three-month period, 43% were from the sub-Rs 45-lakh price bracket. New supply also saw a quarter-on-quarter increase of 58%.

“Green shoots are visible, pointing to the start of a recovery in residential real-estate, evidenced by the improvement in new launches and sales on a quarter-over-quarter basis. These are unprecedented times, which have made buyers aware of the important role that homes play in ensuring their well-being, as well as their physical and emotional security. This, together with the fact that real estate is a hard asset and the fact that home loan rates are near a 15-year low, have encouraged buyers to return to the market. In recent times, the government and the Reserve Bank have also taken steps, to enhance liquidity in the sector and encourage banks to extend home loans at cheaper rates. With several macro-economic indicators showing a positive trend in September, we may well be on the road to a more sustained recovery and the upcoming festival season will be critical, in determining the growth trajectory in the sector over the next 12 months,” said Dhruv Agarwala, group CEO, Housing.com,  PropTiger.com and Makaan.com.

 

Click here to read the full report

 

Industry leaders are of a similar opinion. Airing similar views, HDFC CEO Keki Mistry, on October 11, 2020, said: “The worst is behind us and the recovery has been faster than expected. By the end of December, the economy would be at the pre-COVID levels for most sectors. The December quarter growth could be better than the growth in the December quarter last year,” Keki said at an online dialogue organised by the All India Management Association (AIMA).

While stating that housing was the biggest employing sector in the country after agriculture, the HDFC boss indicated that the benign interest rate regime, which could continue till the time normalcy is restored, would benefit home buyers, thereby, pushing demand.

Nevertheless, demand and supply are quite far from reaching their past levels. When compared to the July-September period of 2019, new supply has contracted by 66% while sales have contracted by 57%. This was not unexpected, as the local economy took a severe beating and the world’s biggest heath emergency caused infection numbers to increase at its peak level in India, during the three-month period covered in the analysis.

“The Indian economy fared much worse than the markets had estimated and registered one of its worst troughs in history. The economy registered a contraction of 23.9% in the first quarter of FY21, which led to various rating agencies sharply cutting their GDP forecasts for India for the current fiscal year. Barring agriculture and allied activities, all other sectors such as manufacturing, real estate, mining and industry went in the red,” the report says.

 

Unsold stock declines while inventory overhang increases

Owing to restrained supply and buyers’ willingness to invest in ready homes, the unsold stock in these markets declined by 12% year-on-year. The unsold stock in the eight residential markets stood at 7,23,060 units as on September 30, 2020, as against 8,23,773 homes on September 30, 2019. On a quarter-on-quarter basis too, unsold stock reduced by 2% in the September quarter, when compared to the preceding quarter.

However, there is huge variation in inventory overhang from the level seen last year, because of the Coronavirus-induced strain on demand caused by the economic uncertainty and weak consumer sentiment. As against 28 months last year, inventory overhang currently is 43 months. Inventory overhang is the estimated time period within which developers will be able to sell off the current stock at the present sales velocity.

The housing markets in the west region continued to have the highest share in the overall inventory stock. Put together, Mumbai and Pune contributed 56% to the national unsold stock, followed by NCR and Bengaluru, with 15% and 10%, respectively.

 

Property price growth in key cities remains flat

While end-user demand and controlled supply in the micro-markets of Ahmedabad and Hyderabad have firmed prices in these cities, other cities have seen almost negligible movement annually, in terms of average pricing during the three-month period ended September 30, 2020.

In Ahmedabad and Hyderabad, there has been an annual increase of 6% in prices, primarily due to supply-side constraints.

 

Weighted average property prices in the top 8 residential markets

CityAverage price as on September 2020 (in Rs per sq ft)Percentage change over September 2019
Ahmedabad3,1516%
Bengaluru5,3102%
Chennai5,2402%
NCR4,232-1%
Hyderabad5,5936%
Kolkata4,1581%
MMR9,4651%
Pune4,9702%

Source: Real Insight Q3 2020

 

Virtual demand back to pre-COVID-19 levels

Amid the gloomy outlook, the demand for homes reached its pre-COVID-19 level in September, the report says, citing data from its Virtual Residential Demand Index. The Virtual Residential Demand Index is a barometer for online consumer interest for buying residential properties within a given period.

The report also indicates that more people are using online platforms to make property purchases, since the government imposed phased lockdowns, to counter the effects of the virus in India, in March 2020.

“It is understood that although there had been a steady movement in virtual interest levels for residential spaces, since the start of the year, the upswing in traction on virtual platforms has become more distinct after the stringent countrywide clampdown since March 2020,” the report said, adding that the phased opening of the economy has also attracted fence-sitters to take advantage of the historic low interest rates and a supportive ecosystem, which have further aided the sector.

“Consumers continue to perceive real-estate as the most stable asset and a number of them are looking to upgrade their homes, as working from home is likely to continue. The government has also been supportive, by taking steps to make buying more attractive. While states such as Maharashtra have reduced stamp duty rates on property transactions, financial institutions have also brought home loan interest rates to the sub-7% level since the RBI brought the repo rate to 4%. On its part, the developer community is not only ensuring buyers are able to book their future homes using virtual tools but also offering festive discounts and easy payment plans. We are optimistic that sales during the festive season will be encouraging and will help drive further recovery in the sector,” says Mani Rangarajan, group COO, Housing.com, Makaan.com and PropTiger.com.

 

Other key highlights in Q3

2BHK the most preferred configuration: 2BHK homes remained the most preferred configuration for both, buyers and developers, in the September quarter, with 53% share in the total launches and 46% share in total sales.

West India has more than half the national inventory stock: At 56%, Mumbai and Pune hold the highest share in the national unsold stock.

Ready homes’ stock: Nearly 19% of the total 7.28 lakh unsold inventory falls in the ready-to-move-in category.

 

Outlook for real estate in a post-COVID-19 era

Despite the low interest rate regime, the demand for housing has yet to hit the expected level and this is likely to happen, only after a cure is found for the Coronavirus. “Although the RBI and the government of India have undertaken a slew of fiscal and monetary measures to revive the economy, its impact on the overall economic scenario is still in a wait-and-watch mode,” says the report.

While stating that limited sales will be driven by fence-sitting end-users, the report also adds that demand is expected to be slow but steady, in the wake of job insecurity and salary cuts across the blue- and white-collar workforce.

On property prices, the report predicts a status quo. “Trends suggest that prices will continue to move in the current range. However, discounts and bargains will be available on a case-to-case basis,” it says.

 


Launches and sales witness sharp fall in Q2 2020 amid COVID-19 pandemic: PropTiger report

Home sales in India’s eight prime residential markets declined by 79% year-on-year (yoy) in the April-June period of 2020, while project launches fell by 81% during Q2 2020, a PropTiger.com report shows

July 29, 2020: With the Coronavirus pandemic posing serious questions on the economic health of the country, housing sales in India’s eight prime residential markets saw a drastic decline during the April-June period of 2020, at a time when the government announced phased lockdowns, to counter the effects of the deadly virus. A quarterly analysis by PropTiger.com, also shows that unsold stock continues to be a problem for India’s developer community, in spite of a fall in launches in the past few quarters, primarily because demand refuses to get back to the normal level.

 

Sales and launches in India’s 8 mega markets

Sales19,038 units79% YoY fall73% QoQ fall
Launches12,564 units81% YoY fall65% QoQ fall

Data for April-June quarter

Source: Real Insight: Q2, 2020

 

Click here to read the full report

 

According to the quarterly analysis report titled Real Insight: Q2 2020, housing sales in the three-month period, which witnessed partial lifting of lockdowns in various parts of the country, dipped 79% over the same period last year. As against 92,764 units in the same period of 2019, only 19,038 units were sold during April-June this year. Affordable housing (units priced up to Rs 45 lakhs) continued to have a lion’s share in overall sales, claiming 44% of the share. Half the units sold during this period were concentrated in Mumbai and Pune.

During the period, real estate developers showed extreme caution with regard to new launches, amid rising liquidity concerns. New supply dipped 81% on a year-on-year basis, while declining 65% on a QoQ basis. In absolute terms, only 12,564 units were launched during this period across these eight markets. At 26%, Bengaluru contributed the highest to the overall supply numbers.

“The current pandemic is an unprecedented black swan event that is expected to contract growth in the global economy, including that of India. As anticipated, demand was adversely impacted due to the economic uncertainty, combined with growing unemployment. In fact, our recent Housing.com-NAREDCO buyer survey, indicated that buyers have pushed back their purchasing decision by up to a year. While developers are increasingly offering schemes, such as flexible payment plans, selective discounts and price protection plans, to attract buyers, they are also cautious and are focused on completing existing projects. The delivery of existing projects may get pushed back, depending on how quickly supply-chain, labour availability and liquidity inflows are restored. We are unlikely to see new launches increase significantly for the next few quarters, as developers wait for demand revival and augment their cash flows through sales of existing units. Notwithstanding these lacklustre results, buyers continue to affirm their faith in real estate as an asset class, with over a third of our surveyed buyers choosing it as their preferred form of investment,” says Mani Rangarajan, group COO, Housing.com, Makaan.com and PropTiger.com.

 

Inventory overhang now at 35 months

In spite of a 13% annual decline in unsold stock, the inventory overhang increased during Q2 2020, primarily because of demand-side concerns. While the eight markets have an unsold stock of 7,38,335 units now, as against 8,46,460 units in Q2 2019, the overhang is now at 35 months as against 28 months last year. Nearly 20% of the unsold inventory is from the ready-to-move-in category.

At 53 months, the inventory overhang is the highest in the NCR market. Overhang refers to the time builders are expected to take to sell off the existing stock, at the current sales velocity.

 

Inventory burden

CityInventory overhang (in months)
Ahmedabad26
Bengaluru32
Chennai36
Hyderabad19
Kolkata38
MMR40
NCR53
Pune30

Data as on June 30, 2020

Source: Real Insight: Q2, 2020

 

Prices remain mostly unchanged

Barring Hyderabad and Ahmedabad, where property values increased by 7% and 6%, respectively, in the past one year, real estate rates remained largely unchanged in most other cities. The cost of property purchases, however, has come down, considering that the RBI has brought down the repo rate to 4%, following which banks have reduced their annual home loan interest rates to below 7%.

 

Price analysis

CityWeighted average price (per sq ft)Annual growth in Q2 2020
AhmedabadRs 3,1046%
BengaluruRs 5,2993%
ChennaiRs 5,138Flat
HyderabadRs 5,5057%
KolkataRs 4,1783%
MMRRs 9,4901%
NCRRs 4,2931%
PuneRs 4,9512%

Data as on June 30, 2020

Source: Real Insight: Q2, 2020

 

Note: Cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, NCR, MMR and Pune.

 


Launches and sales fall in March quarter over Coronavirus fears: PropTiger report

Home sales in India’s nine prime residential markets declined by 26% year-on-year (yoy) in the January-March period of 2020, even as project launches continued their downward streak, falling 51% during Q4 FY20, a PropTiger.com report shows

April 24, 2020: Housing sales and new launches in India’s prime residential markets showed deceleration during the Q4 FY20 period, as the Coronavirus pandemic shattered all chances of any positive growth in the near term. According to a quarterly report of residential markets by PropTiger.com, sales and launches fell across cities during Q4 FY20, as the government was forced to announce a nationwide lockdown from March 25, 2020.

 

ParticularsNo of units in Q4 FY20Quarterly  changeYearly change
Launches35,668-27%-51%
Sales69,235-11%-26%
Inventory738,898-6%-15%

Source: Real Insight: Q4 FY20

 

According to the report, housing sales in India’s nine prime residential markets fell by 26% annually in Q4 FY20, while new launches declined 51% during this period. On a quarter-on-quarter basis, housing sales fell 11% while launches declined 27% in Q4 FY20, the report shows. A total of 69,235 units were sold during the quarter-ending March, as against 93,936 units sold during the same quarter of the last fiscal. Similarly, only 35,668 units were launched in Q4 FY20, as against 72,932 units in Q4 FY19. The nine markets covered in the analysis are Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Pune and Noida.

 

Impact of Coronavirus on real estate

The report adds that housing sales and launches will continue to fall in the ongoing quarter (Q1 FY21), because of the Coronavirus outbreak and the subsequent lockdown. “Because of an unprecedented health emergency, India has imposed a 40-day lockdown till May 3, 2020, to stem the Coronavirus infections. The severe restriction on people’s movement, will adversely impact both, sales and launches, in Q1 FY21. Consequently, there might not be much relief for developers from the existing inventory burden,” it says.

“While the Chinese economy has been reeling under the Coronavirus contagion’s impact since December 2019, the situation in India started to get worrisome only towards March 2020. Following the spike in infections and severity of the situation, the government first announced a 21-day lockdown from March 25 and then, extended it till May 3. The lockdown, which has virtually brought to a standstill all economic activity in the country, has been detrimental to all sectors, including real estate. While there is no questioning the merit of the lockdown, its adverse impact is visible on housing sales and launches in Q4 FY20,” says Dhruv Agarwala, group CEO, Elara Technologies.

According to the report titled, Real Insight Q4 FY20, unsold stock in these markets declined by 15%, when compared to the same quarter last fiscal. Inventory overhang currently stands at 27 months.

At the end of March 2019, the nine markets had a combined unsold stock of 8,66,243 units. This has now reduced to 7,38,898 units. According to the report, Mumbai has the highest unsold stock, followed by Pune.

 

Unsold real estate inventory in India

CityInventory
Ahmedabad41,538
Bengaluru75,001
Chennai36,948
Gurugram43,276
Hyderabad31,118
Kolkata33,966
Mumbai2,78,229
Noida59,041
Pune1,38,781
Total7,38,898

Source: Real Insight: Q4 FY20

 

“While the short-term negative impact of the pandemic on sales and launches cannot be negated, we expect the various support measures announced by the government and the RBI to yield positive results in the medium-term. Also, the lockdown is likely to bring about a major change in consumer behaviour, going forward. There already are early indications of this. While physical site visits to properties have stopped completely, online searches, as well as online bookings of apartments continue to take place. The adoption of digital platforms is likely to go up in the coming months. Much like mobile phone manufacturers that launch new products on a digital platform before a launch on traditional offline channels, we believe several real estate firms, particularly the reputed names, will adopt a similar strategy in the coming weeks and beyond,” Agarwala adds.

So far, no correction has been seen in property values, as rates continued to show upwards movement, even if only marginal. Barring Gurugram, prices showed upwards movement across markets in the past one year.

 

Property price trends in top cities

CityAverage rate per sq ftAnnual growth in %
AhmedabadRs 3,0326%
BengaluruRs 5,2753%
ChennaiRs 5,184No change
GurugramRs 4,893-1%
HyderabadRs 5,4349%
KolkataRs 4,1343%
MumbaiRs 9,4722%
NoidaRs 3,9221%
PuneRs 5,0174%

Source: Real Insight: Q4 FY20

 


Housing sales fall 30% during festive season: PropTiger report

All hopes of an improvement in numbers during the festive season were dashed, with housing sales and project launches falling during the third quarter of the financial year 2019-2020, says a report by PropTiger.com

January 15, 2020: All hopes of an improvement in numbers during the festive season were dashed, with housing sales falling by 30% during the third quarter of the financial year 2019-2020 (Q3 FY20), a report by PropTiger.com shows. As against 91,464 units in the same quarter last year, only 64,034 homes were sold across India’s nine major residential markets, during the quarter ended December 2019, the report titled ‘Real Insight – Q3 FY20’ shows. Project launches also declined by 44% during the quarter year-on-year, amid a deepening crisis in the non-banking finance sector. Only 41,133 new units were launched during the quarter, says the report. Sales and launches fell across cities during the quarter.

“Several measures launched by the government in the past, to revive growth in the real estate market, seem to have made little impact. Considering that real estate is a major contributor to overall growth, which hit 4.5% in the July-September 2019 period, we expect further assistance from the government, to nudge buyers to invest in real estate. In the Union Budget scheduled on February 1, 2020, we expect finance minister Nirmala Sitharaman to announce measures that would result in higher savings for individual tax payers, thus, prompting them to invest in properties,” says Dhruv Agarwala, group CEO, Elara Technologies.

 

 Q3 FY19 (number of units)Q3 FY20 (number of units)Change (in percentage)
Sales91,46464,034-30
Launches73,22641,133-44
Inventory8,83,4837,74,860-12

Source: Real Insight – Q3 FY20

 

The unsold stock in the nine markets, however, reduced by 12% when compared to the level seen in the same quarter last year. Builders are now sitting on unsold stock consisting of nearly 7.75 lakh units and would take nearly 2.5 years to sell it, at the current sales velocity.

However, there was no correction in property prices, with rates increasing the most in Hyderabad in a year. With a 13% annual increase, average property values in the city hit Rs 5,318 per sq ft during the October-December 2019 quarter. The consistent growth in prices has now made Hyderabad as expensive a real estate market, as Bengaluru or Chennai.

 

Average property prices in the top 9 cities

CityAverage value per sq ft (in Rs)
Ahmedabad2,974
Bengaluru5,195
Chennai5,221
Gurugram5,236
Hyderabad5,318
Kolkata4,035
Mumbai9,446
Noida3,923
Pune4,874

Source: Real Insight – Q3 FY20

 


Home sales decline by 25% in September quarter, launches fall by 45%: PropTiger report

Sales of residential real estate units in India’s top nine markets declined by 25% year-on-year, in the quarter-ended September 2019, while launches also fell by 45%, says a report by PropTiger.com

October 18, 2019: India’s real estate sector has struggled to shrug off a slowdown in the July-September 2019 quarter, with housing sales declining by 25% during the period. According to Real Insights, a quarterly analysis of India’s nine residential markets by PropTiger.com, new launches also fell by 45% during the second quarter of the current financial year (Q2 FY20), when compared to the corresponding period last year. While the report expects sales to improve in the upcoming quarter, because of the festive season, it indicates that project launches may continue to fall, as developers in India continue to be under tremendous stress on account of liquidity challenges.

“With the festive spirit kicking in, we expect home sales to improve in the October-December quarter, whereas, new launch numbers may continue to decline, amid stressed liquidity conditions,” says the report. “Record low-interest rates and intensified measures by the government to restore growth momentum, would come in handy for buyers, who are planning to materialise their property purchase plans this festive season,” says Dhruv Agarwala, group CEO, Elara Technologies.

 

Unsold inventory declines in Q2 FY20

In what seems like a relief of sorts for developers, inventory levels during the quarter declined by 13% year-on-year. As of September 2019, builders in India’s nine markets have an unsold stock of 7,78,627 units, shows the report. Inventory overhang, shows the report has also declined during the quarter to 28 months. Inventory overhang is the estimated time that is likely to be spent, in selling the existing unsold stock at the current sales velocity. So, a 28-month overhang means that developers with inventory stock in the country’s nine residential markets would take two years and four months, to sell their existing stock.

 

Property prices increase marginally

An ongoing demand slowdown notwithstanding, property values have witnessed a marginal appreciation in the past one year, shows the report. Except for Gurugram and Chennai, where prices corrected by 4% and 1% annually, respectively, values appreciated in all other cities. The upwards movement in Hyderabad real estate has continued, with prices increasing by 15% in the past one year, shows the report.

The report also indicates that over two lakh housing units were delivered in the first two quarters of this financial year, while more than four lakh new units will also be delivered in the remaining half of this financial year. Another, 4.52 lakh ready-to-move-in homes are expected to join the market by FY21.

Note:

The cities covered in the analysis are Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.

 


Affordable housing accounts for half of the unsold stock in key cities: PropTiger.com report

Units priced below Rs 45 lakhs, account for nearly half the unsold housing stock in India’s top nine cities, says a report by PropTiger.com

August 20, 2019: At a time when the government is busy launching measures to boost affordable housing in the country, homes sales and new launches in this category have declined. Units priced below Rs 45 lakhs account for nearly half the unsold stock in India’s nine key property markets, data available with PropTiger.com shows. Of the eight lakh units that have failed to find takers till June-end 2019, half were priced below Rs 45 lakhs.

Nevertheless, unsold inventory during the April-June 2019 quarter (Q1 FY20) declined by 12% year-on-year amidst a decline in new launches and comparatively better sales. While home sales in the affordable category fell 7% during the quarter ending June, new launches declined by 56%, when compared to the same quarter of 2018.

 

CitySales in the affordable housing segment
Q1 FY19Q1 FY20YoY change
Ahmedabad3,6663,577-2%
Bengaluru3,4262,854-17%
Chennai2,0782,30111%
Gurugram2,0873,31959%
Hyderabad1,187686-42%
Kolkata1,9292,21015%
Mumbai14,51212,459-14%
Noida4,1921,867-55%
Pune9,75110,5518%
Grand total42,82839,824-7%

 

CityLaunches in the affordable housing segment
Q1 FY19Q1 FY20YoY Change
Ahmedabad5,403259-95%
Bengaluru3,3392,891-13%
Chennai2,3401,723-26%
Gurugram1,2023,626202%
Hyderabad1,330417-69%
Kolkata1,414524-63%
Mumbai13,7953,633-74%
Noida2,688900-67%
Pune9,8434,069-59%
Grand total41,35418,042-56%

 

Future trends: Sales may improve, while new launches will remain subdued

Some improvement in sales can be expected in the upcoming quarters, after the government increased the deduction limit on home loans meant for the affordable housing category. Buyers, who take a loan to buy a unit below Rs 45 lakhs, can now avail of deductions of up to Rs 3.5 lakhs in a year, on the interest component.

“A low interest rate regime, along with the measures announced in Budget 2019, to push affordable housing, would encourage home buyers to invest actively in this category now,” says Dhruv Agarwala, Group CEO, Elara Technologies. “New launch numbers, however, may not see much improvement, as developers are entirely focused on delivering their ongoing projects. With these two factors at work, housing inventory in India’s key property markets, will decline significantly in the following quarters,” he adds.

 

Cities with the largest stock of unsold affordable housing

According to data, Mumbai has the highest unsold inventory in the affordable housing category, with over 1.39 lakh units up for grabs. Following India’s financial capital is Pune, with over 98,000 unsold affordable units. Ahmedabad, Noida and Kolkata also have substantial inventory. Buyers looking for fresh and ready-to-move-in units, can explore these markets to find a budget property and also save on taxes.

 

CityUnsold inventory of affordable housing
Q1 FY19Q1 FY20YoY change
Ahmedabad45,75141,791-9%
Bengaluru23,95020,146-16%
Chennai15,57018,70920%
Gurugram22,20322,3070%
Hyderabad7,9654,881-39%
Kolkata33,55430,923-8%
Mumbai1,65,4041,39,984-15%
Noida43,20435,811-17%
Pune113,77198,378-14%
Grand total471,372412,930-12%

 


New housing launches fall by 47%, while sales decline by 11% in Q1 FY20: PropTiger.com report

Home sales in India’s nine major property markets declined by 11% in Q1 of FY20, while new launches fell by 47%, as cash-starved developers waited for the outcome of the Lok Sabha elections before making any new plans, says a report by PropTiger.com

July 23, 2019: Home sales in India’s nine major property markets declined by 11% year-on-year in the first quarter (April-June) of the current financial year (FY20), according to a report by PropTiger.com. During the same period, new launches also fell by 47%, primarily because cash-starved developers waited for the outcome of the Lok Sabha elections, before making any new plans, the report titled ‘Real Insight‘ indicates. The only relief during the quarter, came in the form of a reduced housing stock, with unsold inventory declining 12% YoY.

The cities included in the analysis were Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.

 

Launches: Gurugram defies the trend

As against 71,970 units in Q1 of FY19, only 37,852 housing units were launched in Q1 FY20, resulting in a fall of 47%. Barring Gurugram, where new launches more than doubled, from 2,588 units to 5,945 units, new launches fell across cities during this period. “The severe liquidity crunch and harsh market conditions continue to drive realtors to keep their guard on and exercise extreme caution, with respect to new launches, in order to survive in a difficult environment,” said the report.

 

CityLaunches
Q1 FY19Q1 FY20YoY change
Ahmedabad7,499824-89%
Bengaluru8,7505,169-41%
Chennai3,5022,374-32%
Gurugram2,5885,945130%
Hyderabad5,4992,416-56%
Kolkata2,8462,004-30%
Mumbai22,7618,757-62%
Noida3,8201,835-52%
Pune14,7058,528-42%
Grand total71,97037,852-47%

 

Sales: Some cities show pick-up

When compared to 80,628 units in Q1 FY19, only 71,957 units were sold in Q1 FY20, a fall of nearly 11%. Home sales, however, increased in some cities, including Gurugram, Hyderabad, Kolkata and Pune. The sharpest increase in sales was seen in the millennium city Gurugram, where 4,951 units were sold in Q1 FY20 as against 3,737 units in Q1 FY19 – an increase of 32%.

 

CitySales
Q1 FY19Q1 FY20YoY change
Ahmedabad5,2683,362-36%
Bengaluru10,2198,431-17%
Chennai4,6834,574-2%
Gurugram3,7374,95132%
Hyderabad5,6656,20410%
Kolkata3,1563,48110%
Mumbai26,22222,652-14%
Noida7,4253,304-56%
Pune14,25314,9985%
Grand total80,62871,957-11%

 

Sales may, however, see some improvement in the future.

“A stable government has taken charge at the centre, after the Lok Sabha elections. The new government has announced several measures in the Union Budget 2019-20 that would definitely trigger fresh activity in India’s real estate sector,” said Dhruv Agarwala, group CEO, Housing.com, PropTiger.com, Makaan.com and Fastfox.com. “The Budget has, for instance, offered relief to home buyers, by increasing the tax deduction limit on the home loan interest component to up to Rs 3.50 lakhs on affordable homes. Several banks have also lowered their interest rates, after the RBI reduced its repo rate. As a result of this, sales activity might see a pick-up in the upcoming quarters,” Agarwala added.

 

Inventory: Falling for the better

On account of an arrest in new launches, housing inventory declined by over 12% in the past one year. Real estate developers had an inventory stock of 7,97,623 units in Q1 FY20 as against 9,09,324 units in Q1 FY19. Inventory stock declined across cities during the quarter, data showed. The inventory overhang also reduced slightly to 30 months – at the current sales velocity, it would take developers less than three years to sell the existing housing stock. The report added that another 5,00,000 fresh units would join the market by March 2020.

 

CityUnsold inventory
Q1 FY19Q1 FY20YoY change
Ahmedabad64,56360,521-6%
Bengaluru87,60277,295-12%
Chennai37,87837,109-2%
Gurugram47,44946,426-2%
Hyderabad43,32232,874-24%
Kolkata50,14644,970-10%
Mumbai3,43,1112,92,225-15%
Noida76,37863,637-17%
Pune1,58,8751,42,566-10%
Grand total9,09,3247,97,623-12%

 

Prices: Hyderabad shows significant positive growth

Rates of property in Hyderabad increased by 17% in the past one year, the report shows. In other cities, however, the growth was muted with rates moving upwards between two and three percentage points. Gurugram was the only city that saw some price correction in the past one year, with prices falling by 3%.

 

FAQs

Which city has the lowest property rates?

Among the top eight cities, Ahmedabad had the lowest property rates in Q4 2020 at Rs 3,213 per sq ft.

Which city has the highest inventory overhang?

The National Capital Region had the highest inventory overhang in Q4 2020 at 72 months.

What is unsold inventory?

Unsold inventory in housing is the stock for which a builder has yet to find takers. This unsold stock is known as housing inventory.

What is inventory overhang?

Inventory overhang is the time builders in a particular market would take to sell off the unsold stock lying with them. This timeline is predicted factoring in the existing sales velocity in that market. If a builder would take, say, 25 months to sell his unsold stock after doing all the above mentioned calculation, his stock has an inventory overhang of 25 months.

 

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