There seems some optimism is building up around the troubled housing sector that has suffered a setback following the COVID-19 induced lockdown. The good news is the sector has witnessed a spurt in housing sales during the July-September quarter, up 34 percent as compared to the April-June quarter.
According to a report by JLL Research, a total of 14,415 units were sold during the quarter ended September, as against 10,753 units sold during the previous quarter.
Mumbai accounted for 29 percent of the total sales in the quarter, while 22 percent of sales was contributed by Delhi NCR. Growth in sales activity was also driven by stronger demand in Chennai, Hyderabad and Pune.
“We are feeling cautiously optimistic about the residential market, driven by sales volumes in Mumbai and Delhi. A combination of favourable factors such as low mortgage rates, attractive prices combined with developers’ lucrative payment plans together reinforces the longer-term potential of the sector. For end-users, the next 12 months are ideal to buy a house.” said Ramesh Nair, CEO and Country Head, India, JLL.
| ||Q2 2020 (in units) ||Q3 2020 (in units) ||Growth (%) – Q3 2020 over Q2 2020|
“In the subsequent quarters, the translation of demand into sales will primarily hinge on enhanced consumer confidence, which in turn depends upon the continued implementation of progressive government policies amidst the gradual revival of the Indian economy at large,” Nair added.
Residential market activity is also being supported by renewed interest from NRIs in Q3 2020, resulting in more pent up demand in the market and increased enquiries received by developers.
New launches fall 14% QoQ
According to the report, the new launches during the quarter declined 14 percent QoQ to 12,654 units launched. Developers focused on the completion of under-construction projects and clearing their existing inventory.
Hyderabad and Mumbai accounted for over 60 percent of the total new launches in the quarter. The drop in new launches was driven by Bengaluru, which witnessed a substantial decline of over 80 percent as compared to Q2 2020.
Development focus on mid and affordable segments continued in Q3 2020 with nearly 75 percent of the new launches in the sub Rs 1 crore category. Moving ahead, the focus on these price segments is expected to continue with developers focussing to reap the benefits of strong pent up demand, the report said.
Unsold inventory dips marginally
The unsold inventory across the seven markets, namely Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Pune and Kolkata, decreased marginally to 457,427 units from 459,378 units. Mumbai and Delhi NCR together account for more than 50 percent of the unsold stock which is at various stages of construction.
Prices remain stable
In Q3 2020, prices of the residential real estate remained largely stable across all the seven markets when compared to the previous quarter. However, it is important to note that developers in certain markets are providing moderate price discounts to kickstart sales, thereby facilitating cash flows to tide over the crisis in the short term.
Over the last few years, residential prices in most markets have remained stagnant. Developers have been operating with low margins and the chances of a significant reduction in prices are unlikely.