Property markets of Hyderabad and Bengaluru have led the resurgence in sales with 46% and 35% on-year growth in residential sales during the quarter. National Capital Region also witnessed 25% growth, while Mumbai Metropolitan Region (MMR), Pune and Chennai saw 5%, 11%, and 15% decline, respectively.
On sequential basis too, housing sales rose 12% from 43,800 units recorded in the quarter ended December.
“The series of policy reforms and structural changes have transformed the way Indian real estate business is conducted. This has been a definite blessing. The sector is by no means out of the woods yet, but we are now seeing some green shoots of recovery,” said Anuj Puri, Chairman – ANAROCK Property Consultants.
With combination of various factors supporting prospective homebuyers, experts have been suggesting that the market is in buyers’ favor.
“Homebuyers have realized that prices are unlikely to go down much from these levels in most part of the country. This seems to be the right time to buy a house as time correction has already happened and prices have come down in certain parts of the country, interest rates have bottomed out and the government has been encouraging home ownership through both fiscal benefits as well as the (CLSA) subsidy scheme,” said Keki Mistry, Vice Chairman and CEO of Housing Development Finance Corporation (HDFC).
Launches across these markets stood at 33,300 units, down 18% from a year ago. However, on sequential basis, launches rose 27%, indicating that developers are intent on making up for the lost ground with policy reforms and structural changes now in place.
“The market has turned end-user friendly and 2018 is bringing new launches that match demand. The days of product mismatch are on their way out,” Puri added.
Key cities contributing to new launches during the quarter included MMR, Bengaluru and Kolkata, altogether accounting for 66% of addition. Around 6,500 units were launched in Kolkata that saw a massive rise of over 300% December quarter. A large affordable housing project of around 3,500 units was a key contributor to the rise in new units hitting the market in the quarter.
While MMR was a key contributor to new launches in Q1 2018, the city’s new launches recorded a drop of 25% from the previous quarter with 8,600 units. The previously intensely investor-driven city is now finally aligning itself to the changing market conditions with 87% unit additions in the sub-INR 1.5 crore price bracket.
A notable aspect of new launches was that the share of Tier I developers increased from 35% in the previous quarter to 40% in the current quarter. Evidently, the expected RERA Effect in terms of boosting organized players is making itself felt.
Residential property prices across these cities remained largely range-bound during the quarter when compared to the previous quarter. The primary reason was the significant unsold stock to the backdrop of limited improvement in demand. Affordable and mid-segment housing dominated, with 74% of unit launches or 24,600 units coming in with price tags under Rs 80 lakh. Supply is now being very visibly geared towards end-users, and this is a major shift from Indian real estate’s previous investor and speculator-driven orientation.