The residential market saw some upward movement in sales velocity in 2018 but the year stopped short of a significant recovery. Total sales of residential units were estimated to be 242,328, registering a six per cent increase over full year 2017, according to a report by Knight Frank India, titled ‘India Real Estate – Residential and Office, July-December 2018’. The 10th edition of this half-yearly report presented a comprehensive analysis of the residential market performance across eight cities (National Capital Region (NCR), Mumbai, Bengaluru, Hyderabad, Chennai, Ahmedabad, Pune and Kolkata) for the period July-December 2018 (H2 2018).
Residential market highlights for top eight cities
- 2018 marks the first time in this decade, when annual launch numbers have grown y-o-y.
- The total new units launched in full year 2018 is estimated to be 1,82,207 which was higher by 75 per cent, as compared to the total units launched in 2017.
- H2 2018 saw a total of 89,500 (approximately) new unit launches, which was 119 per cent higher, compared to H2 2017.
- 60 per cent of all launches were within the Rs 50 lakhs bracket that most developers are concentrating on – the affordable and mid-ranged segments.
- Mumbai (38,390 units), Pune (18,580 units) and Bengaluru (11,830 units) saw the highest new unit launches in full year 2018.
- Mumbai saw the highest y-o-y growth of 220 per cent, while Pune recorded a nearly 157 per cent increase. A full-fledged RERA in both these cities in Maharashtra, coupled with the reprieve from dumping ground ban in Mumbai, facilitated the growth in new launches.
- Most markets recorded moderate growth in prices. Mumbai prices fell by seven per cent, while Hyderabad prices vaulted by seven per cent y-o-y in 2018.
- Pune (-3%), Kolkata (-4%) and Chennai (-3%) recorded a moderate correction in asking prices. NCR (+2%), Bengaluru (+2%) and Ahmedabad (+1%) meanwhile saw prices increase marginally.
- An improving regulatory environment, reducing prices, indirect discounts and an increasing infusion of residential products that are more in tune with the home buyer’s preferences, have culminated in a six per cent y-o-y growth in sales during 2018. Sales volume in full year 2018 was estimated at 2,42,328 units.
- Bengaluru saw the highest annual increase in sales by 27 per cent y-o-y in 2018, riding on the back of economic stability and job security. Even the NCR saw sales improve by eight per cent y-o-y in 2018, on the back of stronger sales traction in Noida and Greater Noida.
- Kolkata (-10%) saw a decline in sales in full year 2018 over 2017.
- The total unsold inventory levels have reduced at the end of 2018 and are estimated to be 4,68,372 units, which was lower by 11 per cent since end of 2017 and close to 30 per cent lower than 2016.
Source: Knight Frank Research
Commenting on the report, Shishir Baijal, chairman and managing director, Knight Frank India said: “The residential market in 2018 recorded a recovery after seven years, which has been led by the affordable housing segment. Incentives from the government, such as lower GST rates and infrastructure status to affordable housing, have fuelled the demand for the sector. The supply side has accordingly calibrated itself in this period.
“Having said that, the NBFC crisis created a liquidity crunch in the second half of 2018, which restricted sales, particularly in Mumbai and NCR in H2 2018. The markets will remain in a cautious mode due to the upcoming general elections and the after-effects of the NBFC crisis, through most of the first half of 2019. On the positive side, the anticipated downward revision of GST on under-construction houses, should provide a boost to buyer sentiments. This, coupled with stable interest rates and inflation remaining largely under control, should lead to increased sales in the second half of 2019. The focus is expected to remain on the affordable segment.”