Home sales in India drop 7% in Q2; only 84,930 units sold: Report

India witnessed a drop of 7 per cent in home sales in the second quarter, with only 84,930 units sold in Q2 against 99,550 in Q1, shows a report released by PropEquity, a real estate data, research and analytics firm. The report captures trends in nine tier 1 cities including Gurugram, Noida, Mumbai, Thane, Bengaluru, Chennai, Kolkata, Hyderabad and Pune.
 

Drop in sales
 

A drop of sales of 7 per cent in a sequential quarter (Q2 vs Q1) of 2022 is witnessed as developers across cities focussed on clearing earlier launched inventories. Sales have also been hit as home loan interest rates increased over the last several quarters impacting affordability. Potential home buyers are also finding deals in their price brackets to be challenging as projects of renowned developers have seen appreciation, said the report.

Although, Bengaluru witnessed the maximum growth in sales on Y-o-Y basis with 119 per cent increase in Q2 2022, primarily because of IT/ITES sector returning to office and increased hiring in the IT sector resulting in increased demand. 

This drop in sales is due to “inflationary pressures on input costs [which] compelled developers to increase property prices and also because RBI unleashed two rate hikes that swelled up home loan interest rates” said Anuj Puri, chairman, ANAROCK Group. 

He cautions against further rate hikes: “Any future hikes will reflect markedly on housing sales. The rate hike will undoubtedly push up home loan interest rates, which had already begun creeping upward after the surprise monetary policy announcement in April”.

Total units launched

Total units launched across the top nine tier 1 cities witnessed a drop of 24 per cent on a Q-o-Q basis; 82,150 units were launched in Q2 against 89,150 units in Q1. However, this is a growth of 51 per cent on Y-o-Y basis. Most of the cities have witnessed a lower new launch rate compared to the previous quarter. However, the numbers are positive as compared to previous year, except in Hyderabad. Thane continues to remain at the top spot in terms of new launches with a jump of 109 per cent on Y-o-Y basis.

Unsold inventory

The unsold inventory has dropped by 5 per cent when compared to last quarter and by 11 per cent when compared on a Y-o-Y basis. With limited supply versus higher absorption, the inventory levels have dropped. Unsold inventory witnessed significant drop in Gurugram, Noida and Kolkata on Q-o-Q as well as Y-o-Y basis.

Sale prices

Except Noida and Thane, sale prices have started to pick up and have showed a positive trend (2-3 per cent) on both Q-o-Q and Y-o-Y basis, says the report. The sales pricing has started to pick pace with Gurugram witnessing the maximum growth on Q-o-Q basis (15 per cent). Chennai and Hyderabad followed with 15 per cent and 12 per cent increase on Y-o-Y basis.

Explaining the rise in prices, Puri says that the “price increased between 4 and 7 per cent annually, primarily due to increased input costs and good demand post-Covid-19.

Essentially, developers held back fresh supply in the quarter as they sought clarity on the unfolding market sentiments amid increased housing purchase costs”. He is, however, optimistic about the buyer sentiment despite the “availability of less supply to choose from – [as] it’s still a buyer’s market and there is a lot of inventory”.