Defying previous election year trends when sales and new launches remained muted during this period, Q1 2019 saw both housing sales and new supply rise due to multiple Government sops in the first three months of 2019. ANAROCK Property Consultants' data shows that housing sales rose by 12% and new residential supply by 27% q-o-q due to sops in the interim budget, GST rate cuts and lowering of home loan rates post RBI’s recent repo rate cut.
Of the total new supply, affordable housing saw the maximum share at 44%. However, overall unsold inventory across the top cities saw a meagre 1% decline in Q1 2019 over the previous quarter. Unsold housing stock stands at 6.65 lakh units as of Q1 2019.
Pune and MMR were the top performers with new housing supply increasing by 160% and 62% respectively. Housing sales in these two leading Western region cities saw a maximum increase in the quarter by 24% and 19% respectively.
“While we anticipated a negative spill-over impact of the NBFC crisis in the first quarter of 2019, housing sales and new supply assumed an upward trajectory," says Anuj Puri, Chairman – ANAROCK Property Consultants. "The sector is currently riding on a new wave of optimism following the triple benefits it received from the Government in the first three months of 2019. These sops have not only increased homebuyers’ sentiments but will also boost the confidence of builders and long-term investors.”
“Despite a 1% hike in stamp duty and registration charges in Maharashtra, MMR and Pune markets performed significantly well as far as new launches and housing sales are concerned," says Puri. "With project approvals in place, builders in these regions had been waiting for an opportune time to launch their projects, and the prevailing upbeat buyer sentiments was a major kickstart.”
The top 7 cities recorded new unit launches of around 70,490 units in Q1 2019 (as opposed to 55,600 units in Q4 2018) - a quarterly increase of 27%
The ripple effect of the NBFC crisis Q4 2018, coupled with the usually slow pre-election sentiment, could have played spoilsport for both new launches and housing sales in Q1 2019. However, the Government's various interventions have had not only a buffering but a boosting effect. Working closely with the RBI, it has been successful in curtailing the liquidity crisis in the sector.
On a yearly basis, new launches across the top 7 cities together saw a 91% jump in Q1 2019 against the corresponding period in 2018. Similarly, housing sales saw a yearly increase of over 58% in the top cities - led by MMR, Pune and NCR with an increase of over 95%, 80% and 52% respectively.
Around 78,520 units were sold in Q1 2019 with NCR, MMR, Bengaluru and Pune together accounting for 84% of the sales.
Despite the increase in launches and overall absorption in the top 7 cities during Q1 2019 over the previous quarter, overall unsold inventory decreased by a meagre 1% - from 6.73 lakh units in Q4 2018 to 6.65 lakh units by Q1 2019. The yearly decline was over 7% - from 7.13 lakh units in Q1 2018 to 6.65 lakh units in Q1 2019. Bengaluru witnessed the highest reduction in unsold inventory by 27% from Q1 2018 to Q1 2019.
Average residential prices across the top cities remained stagnant in Q1 2019 when compared to the previous quarter - except in Bengaluru and Hyderabad, where the average property prices increased by 1% each over the previous quarter and by 2% in a year.
All in all, the realty sector looks all geared up in 2019. The slash in GST rates to 5% for premium homes and 1% for affordable homes without ITC gives the beleaguered realty sector the much-needed breathing room and will certainly help in maintaining forward momentum over the next three quarters of 2019.
Also, the booster shot given by the Government by changing the budget-specific definition of affordable housing and extending it to <INR 45 lakh has resulted in more inventory from the premium budget henceforth being included in the affordable segment category - a major benefit to buyers.
Anuj Puri, Chairman of ANAROCK Group is a highly respected industry authority and thought leader with 30 years' experience in leveraging Indian and global real estate opportunities. His company ANAROCK has a staff complement of over 1800 qualified and experienced professional, with offices in all major markets in the country, dedicated services in Dubai and a global footprint with over 80,000 preferred channel partners.