Home Sales Up 3% In Q1, Launches Fall 43%: PropTiger DataLabs

Many a state may have yet to notify the final rules of their version of the Central Real Estate (Regulation & Development) Act, 2016, but India's homebuyers seem positive about the likely impact of the legislation. A jump in the number of home sales across top nine cities of India ─ even if not strikingly sharp ─ in the first quarter (April-June quarter or Q1) of the financial year 2017-18 (FY18) does prove that point. As developers prepared themselves to comply with new norms, new project launches also took a hit, show findings of PropTiger's Realty Decoded report for the quarter ending June.

The nine cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Gurgaon (including Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (including Navi Mumbai and Thane), Noida (including Greater Noida and Yamuna Expressway) and Pune.

Let us look at the key findings of the report:

Sales up

The quarter started on a positive note, with home sales numbers increasing three per cent on a quarter-on-quarter basis. Notably, India's financial capital Mumbai, which is known for its expensive property, was the biggest contributor to the absorption. The Maximum City had a share of 23 per cent in the overall sales numbers. Following close was its neighbour city Pune, which contributed 18 per cent to total sales. The share of India's information technology in the total sales for the quarter stood at 15 per cent. However, it was the city of Gurgaon which stole the show when it comes to individual performance. The report shows that home sales in the Millennium City increased 110 per cent over the March quarter. Considering Gurgaon was among the worst-hit markets during the slowdown-period, this change is impressive. The second-best individual performer was Chennai real estate market, which saw home sales rising 24 per cent over the previous quarter.

The biggest contributors to these sales numbers were the projects that were launched over a year ago, the report says.

Launches fall

Cautious developers shifted their entire focus to selling of inventory before the implementations of key legislations. As a result of this, new launch numbers took a major hit. In fact, the fall in new launches was the biggest in the past 12 quarters.

"As expected, new launches were impacted by the RERA, coming down by 43 per cent, quarter-on-quarter. Most of the new launches were restricted to the first month of the quarter. Except Gurgaon and Hyderabad, all other markets saw decline in launches over the same quarter last year," says the report.

However, this fall in new launch numbers also brought down the inventory overhang by five per cent, says the report. Let us simplify this for you. It would have taken 39 months or three years and three months to sell the existing housing stock in Q4 of FY17; In Q1 FY18, it would have taken only 37 months or three years and one month to sell of the existing stock.

Prices decline

A yearly comparison of rates in property markets of the nine cities show five of them saw prices declining. In both Noida and Pune, property prices fell three per cent when compared to the same quarter of the previous financial year. In the same period, rates of property in Gurgaon and Kolkata fell two per cent. In Ahmedabad, rates went down one percent year-on-year. However cities of Hyderabad (four per cent), Bengaluru and Chennai (both two per cent) saw a slight uptick in prices in the same period. In Mumbai, property prices saw a marginal annual increase of one per cent.

Other key takeaways

Here are some noteworthy points shown in the report:

• Though new launches in the affordable segment reduced, this segment accounted for 54 per cent of total sales during the quarter.

• Except Hyderabad and Bengaluru, all other cities have price stagnation for the past three years.

• Hyderabad, Pune and Ahmedabad have the best inventory profile while Noida has the worst profile.

• Noida has biggest share of unsold inventory aged above three years.

• More than 65 per cent of the unsold inventory in Ahmedabad, Kolkata and Pune is in the affordable segment.

• Only Kolkata, Chennai and Hyderabad managed to improve sales numbers over the first quarter of the previous financial year.