The ratings agency expects the momentum to continue in the second half of FY21.The surge in apartment sales in the past few months, especially during the festival season, has led to developers talking about a faster-than-anticipated recovery in the beleaguered real estate industry. However, analysts point out that the surprise demand could be a one-time phenomenon and needs sustained monitoring.
Though analysts project that October-December quarter would post better sales compared to July-September, the projection that demand being experienced at present would continue into the next year needs to be analysed over the short to medium term.
In a report last month, Crisil said, “A favourable, buyer-centric market has created an opportunity for first-time homebuyers and fence-sitters, as well as resale flat buyers. Renewed interest of non-resident Indians (NRIs) in sales is also being observed.”
The ratings agency expects the momentum to continue in the second half of FY21.
“That said, while the overall rebound in real estate demand in October was faster than envisaged earlier, its sustenance post the festive season will be a thing to monitor. On full-year basis, we estimate overall primary sales to witness a decline of 40-50% in top 10 cities. With ready-to-move inventory constituting 10-20% of total inventory in key cities and upcoming supply this fiscal at similar levels, capital values are likely to remain under pressure at least for the rest of this fiscal,” CRISIL added.
Anarock Property Consultants chairman Anuj Puri expressed similar views. “What we are seeing right now is an organic pent-up demand driven by the desire to own homes, further accelerated by schemes and offers.”
Speaking with FE, he said “As per Anarock research, we anticipate housing sales in the ongoing quarter to see a 35% rise against the preceding Q3 2020 in the top seven cities collectively. In such a scenario, we would see housing sales in the whole of 2020 to rebound to over 50% of the overall sales made in 2019.”
However, figures so far seem less optimistic. Roughly 2,61,500 units were sold in 2019 across the top seven cities. During Q3 2020 (calendar year), housing sales stood at around 29,520 units compared to 45,200 in Q1 2020. Sales in Q2 2020 stood at a mere 12,730 units.
In November, Icra in a report also pointed out that residential segment witnessed a sharp recovery in Q2 FY21, post a severe decline in Q1 FY21. Overall housing sales volume witnessed a Y-o-Y decline of 50% in H1 FY21 across the top eight cities. However, sales volume bounced back considerably with a Q-o-Q growth of 60%, recorded across property markets in the second quarter of the current fiscal.
It was primarily driven by a gradual unlocking of the economy, pent-up demand and improved affordability on the back of reduced home loan rates and attractive payment schemes/discounts, it said.
The ratings agency had earlier expected a 45% overall decline in sales volumes in FY21. “However, post the lows in Q1 FY21, sales across the top eight cities rebounded in Q2 FY21, indicating some green shoots of normalisation. With some further recovery expected in H2, ICRA is revising its earlier estimate of sales volume decline in FY21 to 35-40%,” it added.
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