Festive Season Fails To Boost Sentiment; Housing Sales Fall 30% In Q3: PropTiger Report
The festive spirit failed to give a boost to the muted buyer sentiment in India as housing sales numbers continued to show a decline in Q3FY20 amid expectations of an improvement. According to Real Insight, a quarterly analysis of India’s nine prime residential markets by PropTiger.com, home sales during the October-December 2019 period declined by 30 per cent when compared to the same period last year. Sales fell across cities during the quarter, indicating a nation-wide phenomenon.
Amid aggravating liquidity concerns, project launches also continued to fall, registering a 44 per cent decline in Q3FY20 when compared to Q3FY19. Project launch numbers also showed decline across cities.
“Several measures launched by the government in the past to revive real estate growth seem to have made little impact. The sector being a major contributor to overall growth, which hit 4.5 per cent in the July-September period, we expect further assistance from the government, which would nudge buyers to invest in realty. In the Union Budget, we expect finance minister Nirmala Sitharaman to announce measures resulting in higher savings for individual taxpayers, thus, prompting them to get back to property investments,” says Dhruv Agarwala, Group CEO, Elara Technologies.
The numbers analysis
Q3FY19 (no. of units)
Q3FY20 (no. of units)
Source: Real Insight-Q3FY20
When compared to the levels seen last year, the unsold housing stock reduced by 12 per cent during the quarter ended December 31, 2019 offering some relief to developers for whom inventory is a big burden amid an ongoing demand slowdown.
As against over 8.83 lakh units, developers now have nearly 7.75 lakh units of unsold stock in the nine markets, including Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Noida and Pune. At the current sales velocity, builders would take 29 months to sell off the existing stock.
Mumbai and Pune together contribute 57 per cent of this unsold stock, the report shows.
Major contributor: Mumbai continues to see the most action, contributing 40 per cent to both, launch and sales numbers in Q3.
Affordable housing: Affordable housing continued to dominate launches as well as sales. While 52 per cent units were launched in this segment during the quarter, affordable homes had a 56 per cent share in overall sales numbers in Q3.
Affordable homes are units priced within the Rs 45-lakh budget.
Ready versus under-construction: Nearly 53,000 such units were sold during the quarter while over 11,000 flats sold in Q3 were under-construction homes.
Pricing: Average property values also showed upwards movement across cities during the quarter, even if only marginally. The price rally, however, continued for India’s pharmaceutical capital Hyderabad, where average property rates increased 13 per cent year -on- year to reach Rs 5,318 per square foot.
Home Sales, New Launches Decline In September Quarter: PropTiger Report
Various measures launched by sector stakeholders are yielding only limited results as housing sales in India’s nine key markets declined by 25 per cent during the July-September quarter this year, when compared to the same period last year.
According to Real Insights, a quarterly analysis of key residential markets in the country by PropTiger Datalabs, new unit launches fell by 45 per cent in the September quarter year-on-year (y-o-y), while housing sales fell by 25 per cent. The only positive news was the reduction in unsold housing stock, with inventory declining by 13 per cent over the July-September quarter in FY19.
As against 61,679 fresh units launched in Q2 FY19, only 33,883 new homes were launched in Q2FY20. Of these, 41 per cent were priced at Rs 45 lakhs or less. While new launches declined across cities during the quarter except Gurugram, the highest share of fresh units during the three-month period, was claimed by Mumbai and Pune
A total of 65,799 units were sold during the quarter ending September this year as against 88,078 units during the corresponding quarter the previous year. Nearly half the units sold during the quarter were affordable homes.
“While new launch numbers might continue to fall in the coming quarters amid the liquidity crunch, we expect home sales numbers to improve, factoring in the festive spirit. Record low interest rates would encourage buyers this festive season,” says Dhruv Agarwala, Group CEO, Elara Technologies.
This could further lower the inventory, especially in affordable housing. More than half the unsold stock currently lying in India’s prime residential markets are affordable homes, shows data. Developers currently have a total unsold stock comprising of over 7.78 units.
The report covers the residential markets of Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Noida and Pune. It shows that price movement in most cities has been negligible in the past one year, except Hyderabad where, property values have appreciated 15 per cent in the past one year. Barring Gurugram and Chennai where rates moved slightly downwards, prices also moved up in the range of 2-4 per cent.
The report also indicates that more than four lakh new units will be delivered in second half of the financial year. Another, 4.52 lakh ready-to-move-in homes are expected to join the market by FY21.