Housing Markets Inch Towards Recovery In Sep Quarter: PropTiger Report
The affordable housing segment continues to play an instrumental role as India’s residential real estate market attempts to spring back to its feet after taking a severe beating on account of the Coronavirus pandemic. According to Real Insight Q3 2020, a quarterly analysis of key market indicators in India’s prime residential markets of Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, the Mumbai Metropolitan Region (MMR), the National Capital Region (NCR) and Pune, housing units in the sub-Rs 45-lakh price bracket made the biggest contribution to home sales during the July-September quarter (Q3) of 2020, contributing 45% to overall sales numbers. A total of 35,132 units were sold during the period between July and September 2020, an increase of 85% from the previous quarter. When compared to the same period in 2019, however, sales show a decline of 57%.
On the supply side, too, the affordable housing segment played a big role. 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%.
Recall here that under the income tax laws in India, housing units worth up to Rs 45 lakhs qualify as affordable homes.
“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.
While new launches increased 58% when compared to the April-June period of this year, they fell by 66% when compared to the corresponding period of 2019, data show.
The annual comparison is indicative of the fact that housing markets in India are a long way from reaching their pre-COVID-19 levels, which itself had been quite lacklustre in the past half-a-decade, because of an overall slowdown in the housing market.
Key numbers for July-September quarter 2020
Up 85% qoq
Down 57% yoy
Up 58% qoq
Down 66% yoy
Source: Real Insight Q3 2020
Price growth remains flat
Even though polls are predicting a fall of 10% in property values in 2020 on account of the Coronavirus pandemic, prices of apartments in key markets have not undergone any significant reduction. Markets like Ahmedabad and Hyderabad have, in fact, shown some upward movement in average property values on an annual basis.
“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.
Average property prices in key markets
Weighted average property prices in top 8 residential markets
Average price as on September 2020 (in Rs per sq ft)
Percentage change over September 2019
Source: Real Insight Q3 2020
Overhang increases even though unsold stock reduced by 12% yoy
As supply remained limited, with developers showing caution in launching new projects, the unsold inventory in the eight markets reduced by 12% yoy and 2% qoq. Barring Hyderabad, where unsold inventory increased by 3% as compared to the previous quarter, due to an influx of new supply, all the other cities covered in the analysis witnessed a reduction in unsold inventory in the range of 1%-5% as compared to the previous quarter.
While the national inventory overhang increased from 28 months in September 2019 to 43 months in September 2020, it remained the highest in the NCR, at 58 months. Inventory overhang is the estimated time period within which developers will be able to sell off the current stock. This projection is made, keeping in view the current sales velocity.
Inventory stock and overhang in top eight markets
Inventory as on September 30, 2020 (units)
Inventory overhang (in months)
Source: Real Insight Q3 2020
Home Sales Dip By 79% In June Quarter, New Supply Falls By 81%: PropTiger Report
July 29, 2020: Any chances of a recovery for real estate in India, which has been reeling under the impact of a demand slowdown for the past five years, have been toppled by the Coronavirus pandemic, housing sales and supply numbers available with PropTiger.com show.
According to Real Insight: Q2 2020, a quarterly analysis of eight prime residential markets in India, only 19,038 units were sold during the period between April and June 2020, when the government had imposed strict travel restrictions in order to contain the virus' spread. The adverse effect of the pandemic was even more pronounced on new supply, as only 12,564 units were launched during the three-month period.
In percentage terms, housing sales declined 79% annually while falling 73% QoQ. Similarly, new supply dipped 81% annually while falling 65% QoQ.
Launch and sales numbers
Source: Real Insight: Q2, 2020
“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 economic uncertainty, combined with growing unemployment. 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 understandably cautious and are focusing on completing existing projects. In fact, 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 the 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 at 35 months
When compared to the levels seen during the same quarter last year, unsold stock declined 13% in the eight cities, primarily on account of a fall in new launches. As on June 30, 2020, developers had an inventory consisting of 7,38,335 units across these markets. In Q2 2019, the unsold stock stood at 8,46,460 units.
At 55%, Mumbai and Pune markets together contributed the highest share of unsold stock, followed by NCR (15%) and Bengaluru (10%).
Inventory overhang, however, has increased to 35 months as against 28 months last year. Inventory overhang is the time developers would take to sell off the unsold stock, at the current sales velocity. The NCR market has the highest inventory overhang as of now, while Hyderabad has the lowest, at 19 months.
Inventory overhang (in months)
Data as on June 30, 2020
Source: Real Insight: Q2, 2020
While some noteworthy movement was seen in Hyderabad and Ahmedabad housing markets, in terms of price appreciation, rates largely remained range-bound in most other cities. However, rates have not undergone any correction either in the past one year.
Weighted average price (per sq ft)
Annual growth in Q2 2020
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.
Housing Sales Drop 26% In Q4 Amid Corona Scare: PropTiger
May 27, 2020: If India’s real estate sector was finally looking forward to restoration of normalcy, after a prolonged demand slowdown, the Novel Coronavirus outbreak has dashed all its hopes. According to a report by PropTiger Datalabs, housing sales in India’s nine prime residential markets saw an annual decline of 26 per cent for the last quarter (Q4) of the financial year 2019-20 (FY20). The report, titled Real Insight-Q4 FY20, also shows that new launches in these markets fell by 51 per cent year-on-year during the January-March period, amid the government announcing a 40-day lockdown, to slow down the spread of the virus in India.
No of units in Q4FY20
Source: Real Insight: Q4FY20
Sales, launches fall across cities
During the quarter, new supply and sales fell across the nine markets ─ Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Pune and Noida ─ covered in the analysis. While Gurugram saw the sharpest fall in sales (-73 per cent YoY), Ahmedabad witnessed the steepest decline in new launches (-96% annually).
The report adds that housing sales and launches will continue to fall in Q1 of FY21, because of the Coronavirus outbreak and the subsequent lockdown.
“Owing to the 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 have an adverse impact on both, sales and launches, in Q1FY21. 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 impact of the Coronavirus contagion since December 2019, the situation started to get worrisome in India only towards March 2020. Following the spike in number of infections, the government first announced a 21-lockdown on March 24 and then, extended it till May 3, keeping in mind the severity of the situation. 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 the last quarter of last fiscal,” says Dhruv Agarwala, group CEO, Elara Technologies.
“While the short-term negative impact of the pandemic on sales and launches can’t be negated, we expect the various support measures announced by the government and the RBI, to yield positive results in the medium term,” Agarwala adds. He also says the lockdown is likely to bring about a major change in consumer behavior, going forward. "Early indications are already there. 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 says.
Inventory declined 15%
Housing inventory reduced by 15 per cent during the quarter ending March 31, primarily because not many fresh units were added during this period. As on March 31, 2020, real estate developers in the nine residential markets were sitting on a housing inventory of 7,38,898 units and at the current sales velocity, they would take 27 months to sell this stock , shows the report.
As for the concentration of this unsold stock, the Mumbai Metropolitan Region (MMR) and Pune contribute the most to the inventory. Together, these markets in western India have over 4.18 lakh unsold homes.
Price rise continues in Hyderabad
On the pricing front, Hyderabad continued to show positive annual growth, with prices increasing by nine per cent during the quarter when compared to the same period of the earlier fiscal. In other markets, the growth has been dismal. Prices, however, showed only a slight downward movement in Gurugram, falling by one per cent in the past one year. Prices did not fall in any other market in the past one year, shows the report.
Festive Season Fails To Boost Sentiment; Housing Sales Fall 30% In Q3: PropTiger Report
January 15, 2020: 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.