Home sales declined 11%, new launches fell 47% in June quarter: PropTiger report
National, July 23, 2019- PropTiger.com, part of Elara Technologies Pte Ltd, which also owns Housing.com, Makaan.com and FastFox.com, today released the findings of its ‘Real Insight Report’ for the first quarter of the financial year 2019-20 (Q1FY20). According to the report, home sales in India’s nine major cities declined nearly 11% in Q1FY20 when compared to the same period last year. New launches nearly halved during the same period, falling 47% year-on-year.
Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com, Makaan.com, Fastfox.com said, “While we saw a decline in both sales and launches in Q1 FY20, the outlook is optimistic going forward. A stable government at the centre and a Union Budget that announced several favourable measures for the residential real estate sector are likely to act as catalysts. The budget has offered relief to homebuyers by increasing the tax deduction limit on the interest payable on home loans to Rs 3.50 lakh for affordable homes that should drive demand in that segment. Additionally, several banks have lowered interest rates after the RBI reduced the repo rate to a record low. We are confident that these measures are likely to stimulate home sales in the coming quarters.”Sales decline in more than half the cities; Gurugram bucks trendWhen compared to 80,628 units in Q1 FY19, only 71,957 units were sold in Q1 FY20, a fall of nearly 11%. Home sales, however, increased in some cities, including Gurugram, Hyderabad, Kolkata and Pune. The sharpest increase in sales was seen in Millennium City Gurugram, where 4,951 units were sold in Q1 FY20 as against 3,737 units in Q1 FY19, showing an increase of 32%.Interestingly, over half the units sold in Gurugram during the quarter, were priced within a Rs 25-lakh budget range and were for properties primarily lying on the city's peripheries. This is a remarkable change for a city known for its premium properties that carry a comparatively high price tag.
Launches fall as caution among developers continues
As against 71,970 units in Q1 FY19, only 37,852 housing units were launched in Q1 FY20, resulting in a fall of 47%. Barring Gurugram where new launches more than doubled – from 2,588 units to 5,945 units – new launches fell across cities during this period. This was likely due to developers adopting a cautious stance in anticipation of the national election results that were announced only in May 2019.
Tough liquidity conditions continue to force developers to keep their guards on and exercise caution with regard to new launches, which is a prudent approach in a difficult environment.
Developers’ burden seen lightening as inventory declines over 12%
The positive news during the quarter was the decline in existing housing stock, primarily on account of the sharp decline in new launches. In the past year, inventory declined by over 12%. Real estate developers are sitting on an inventory of 797,623 units at the end of Q1 FY20 as against 909,324 units at the end of Q1 FY19. Inventory declined across cities, data show.
Inventory overhang also reduced slightly to 30 months — at the current sales velocity, it would take developers less than three years to sell the existing housing stock.Nearing completion
While stating that 120,500 units were delivered by developers in the nine key markets during the first three months of FY20, the report says that another 500,000 housing units are likely to be delivered by March 2020.
Prices remain largely flat; growth momentum in Hyderabad continues
Except Hyderabad, where prices increased 17% y-o-y, rates of property across cities have remained largely flat in the past year.
The study covered nine key Indian cities including Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.