Quarterly analysis of India's eight prime residential markets shows a significant improvement in the period between July and September 2021, indicating recovery for India's second-largest employment-generating sector could firm up further during the ongoing festive season.
The report by REA India-owned real estate company PropTiger.com found that the homes sales and new supply numbers began to witness appreciation amid economic indicators signals of an overall recovery in India, data show.
Improved Consumer Confidence
According to the report, 55,907 new houses were sold during July and September in Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, NCR, MMR and Pune. It showed an increase of 59% when compared to the corresponding period in 2020.
In September, the manifold quarter-on-quarter (QoQ) jump in home sales was much higher, primarily because of the low benchmark -- only 15,968 units were sold during the May-July period this year (Q2 2021), the report shows. Over 40% of the overall sales were in the price bracket of less-than-Rs-45-lakhs contributed the highest to the quarterly sales, it added.
The tremendous jump in sales numbers could also be attributed to the 10-year-low home loan interest rates - home loans are currently available at 6.50% annual interest.
"Considering housing affordability is at a record high this festive season on the back of 10-year low home loan interest rates and sops offered by some state governments in the form of reduced stamp duties and circle rates, we expect housing markets in the top 8 cities to show solid stability in the ongoing quarter. Though the overall cost of construction has gone up due to the rise in the cost of crucial input materials, rather than seeing an increase in prices, buyers are offered discounts during the festive season," said Rajan Sood, business head, PropTiger.com said.
Inventory Overhang Declines To 44 Months
As of September 30, 2021, builders had an unsold stock of 7,20,519 units across the eight residential markets. Even though new supply numbers added to the overall number of units available for purchase in the eight housing markets, the inventory overhang during the third quarter of 2021 declined to 44 months from 48 months in the previous quarter.
The estimated period builders in a particular market are likely to sell their unsold stock at the existing sales velocity due to the upswing in demand during the quarter, which is expected to improve further in Q4. This may lead to a further reduction in the inventory overhang during the festive season.
While the NCR has the highest inventory overhang of 62 months, Hyderabad has the lowest at 25 months.
'Festive Season To Bring About Complete Turn-Around'
With key growth indicators already moving in the right direction, the ongoing festive season is likely to speed up the real estate recovery pace, the report says.
"It is now a well-established fact that the notion of property ownership has gained significant currency in the aftermath of COVID and its impact on the way people live and work. Even as this has helped build positive consumer sentiment vis-à-vis residential real estate, support measures by the government and the banking sector have set the ball rolling for a positive change in momentum for the sector. In combination, these two factors have helped drive both demand and supply, metrics upwards during the July-September quarter of 2021," says Dhruv Agarawala, group CEO, Housing.com, PropTiger.com and Makaan.com.
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