Housing sales may cross 2L units in 7 cities this year

Hyderabad: Residential sales recorded at 1.61 lakh units during the first nine months of 2022 January-September (Q1-Q3) exceeding the pre-pandemic annual sales, according to JLL's Residential Market Update – Q3 2022. The annual sales stood at 165,791 units in 2014, and not surpassed the same post 2014.With the onset of the festive season, total sales are expected to be more than 2 lakh units this year.

The real estate market across the top seven cities – Delhi NCR, Mumbai, Pune, Kolkata, Bengaluru, Hyderabad and Chennai – registered strong sales backed by robust consumer demand and quality launches by the developers. Quarterly residential sales have seen a revival since Q3 2021 which has further gained momentum this year with sales of over 50,000 units in each quarter.

"We have witnessed a pick-up in sales due to enhanced consumer confidence amidst the steady revival of the Indian economy depicting the immense growth potential of the residential market. Projects launched by reputed developers witnessed good traction by end users," said Siva Krishnan, MD & Head of Residential Services, India, JLL.

He further said, "The larger markets of Bengaluru and Mumbai led the sales in the quarter contributing 41 per cent of the total quarterly sales as they also saw substantial launches. This was followed by Delhi NCR which contributed 19 per cent of the quarterly sales. If we analyse the quarterly sales growth data, except Mumbai all the cities have seen an increase in sales as compared to the previous quarter."

The residential market's inherent strength and the rising importance of home ownership will lead to its continued growth momentum. With the upcoming festive season, both launches and sales are expected to see an uptick. Apart from the affordable and mid-segment, the traction is expected to take place in the premium segment as well backed by launches by established developers in prime locations. The growing need for home ownership and a stable employment scenario is likely to drive the housing demand. The preference of buyers for developers with a proven track record will increase transparency and drive the sector's next phase of growth. On the downside risk, the affordability synergy which was prevailing six months back has been facing some challenges. The strong consumer demand is manifesting itself in the form of strong sales in the affordable and mid categories as well as in the premium segment. The home loan interest rate in the last six months has gone up by around 130-140 bps. Also, the residential price is facing upward pressure due to cost-push inflation. This may play out to be a sentiment disruptor for home buyers albeit on a temporary basis.

"Due to cost-push inflation and robust demand, there is a rise in residential prices with the capital value showing a 3-11% Y-o-Y increase across all cities. New launches have also entered the market at higher prices in some cities. Hyderabad witnessed the maximum appreciation in prices to the tune of 11 per cent on a yearly basis," said Dr Samantak Das, Chief Economist, and Head Research & REIS, India, JLL.

"Also, the increase in the repo rate has resulted in an increase in mortgage rates. However, the interest rate after this hike would be still below what the homebuyers had to pay 8 to 9 years back. We believe that home loan interest rates inching towards 9 per cent and above may result in moderation of housing sales growth in the medium term," he added. With the festive season around the corner, developers continued to launch residential projects to tap into the growing demand by home buyers. The top seven cities under consideration witnessed new launches of 62,000 apartment units in Q3 2022. The majority of the launches were witnessed in Hyderabad (27 per cent) followed by Bengaluru (23 per cent) and Mumbai which had a share of 21 per cent.

In Q3 2022, unsold inventory across the seven cities increased by 1.3 per cent on a Q-o-Q basis as new launches outpaced sales. Mumbai, Bengaluru, and Delhi NCR together account for 63 per cent of the unsold stock. An assessment of Years to Sell (YTS) shows that the expected time to liquidate the stock has declined from 3.6 years in Q2 2022 to 3.1 years in Q3 2022, an indication of robust sales growth.