Home sales and new launch numbers have again shown a year-on-year growth in the period between January and March 2022. Along with that, housing price growth also accelerated during the quarter, with every top market showing an upwards movement in average rates of new properties, according to a report by PropTiger.com.
As per the report, activity in India’s residential real estate segment has seen a further increase in the first three months of the year 2022 as record low home loan interest rates fuel consumer enthusiasm along with government-sponsored subsidy programmes.
In fact, 70,623 units were sold in Q1 2022 as compared to 66,176 units sold in Q1 2021, registering a 7% YoY growth. The improvement in terms of new supply was significantly higher, with a YoY growth of 50% in new launches during the same period. A total of 79,532 units were launched in Q1 2022 as compared to 53,037 units in Q1 2021.
The markets covered in the quarterly report titled ‘Real Insight Residential – January-March 2022’, include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region, Delhi-National Capital Region and Pune.
“India’s housing sector is again emerging as a bright spot in the country’s economy, helping it spring out of the pandemic-induced slowdown. With further normalization of activity in the months to follow, we expect greater positive changes,” said Dhruv Agarwala, Group CEO, PropTiger.com, Housing.com & Makaan.com.
In a quarter during which the demand for housing units priced in the range of Rs 45-75 lakh was the highest, Mumbai and Pune had the biggest share in housing sales, with their combined share standing at 56% in the overall sales.
Even though the recent joint consumer survey conducted by the group company of REA India, Housing.com and Industry body NAREDCO, found that 57 per cent of potential homebuyers would prefer to buy a ready-to-move-in (RTMI) property, 79% of the sales during the quarter ended in March was seen in the under-construction category, mainly because of the price advantage this segment offers over the ready to move in segment.
Half the cities show decline in launches
The MMR market did the heavy lifting in terms of new supply in the quarter ended March 31, demonstrating a 246% increase YoY. The stellar performance by this market was mainly responsible for an overall good performance of the housing market on this parameter as four of the eight markets covered in the analysis showed a decrease in new launches. Cities where new launches showed a decline during the March quarter include Ahmedabad, Chennai, Delhi-NCR and Kolkata.
Property prices climb too
As expected, housing price growth also accelerated during the quarter, with every market covered in the analysis showing an upwards movement in average rates of new properties. Most of this increase in rates can be attributed to the hike in prices of building materials.
The sharpest uptick in property prices was registered in Chennai, where average rate of properties has undergone a 9% appreciation in the past one year, the report shows. Pune and Ahmedabad followed this southern market closely in terms of price increase, with both markets witnessing an 8% rise in their average property rates.
Agarwala is of the opinion that house ownership may become pricier with various government-funded subsidy schemes coming to an end in March this year. This price appreciation would be further compounded by rising home loan rates if the RBI were to hike the benchmark lending rate, which may well be on the cards given inflationary pressures. So far, the country’s central bank has maintained the repo rate– to which home loan interest rates in India are linked–at 4%.
Housing inventory increases marginally amid higher supply numbers
As activity in housing supply picked up pace, housing inventory swelled slightly, at an annual rate of 4%. Builders in India are sitting on an unsold stock consisting of 7,35,852 units as on March 31, 2022. This number stood at 7,05,344 units at the end of March 2021. With an individual share of 35% and 16%, respectively, Mumbai and Pune continue to contribute the most to this national housing inventory.
However, inventory overhang— the estimated period builders are likely to take to sell off their unsold stock— has declined to 42 months as against 47 months a year ago, primarily because of higher demand for housing. Delhi NCR has the highest inventory overhang while Bangalore and Kolkata have the lowest.
