Home Sales Surge On Cheaper Loans, Modi Government’s Affordable Housing Push


MUMBAI: Home Buyers may have felt the pinch of demonetization aftereffects in January-March this year but that did not deter them from buying their dream home.

Conventional wisdom and anecdotal data may have suggested buyers holding back on home purchases in the first quarter, but data from top eight cities shows otherwise.

Primary residential sales across the country’s top eight cities increased 21% in January-March over the previous quarter, numbers from Liases Foras Real Estate Rating & Research, a well-known housing and real estate data agency shows.

Kolkata, Hyderabad and Ahmedabad led the revival with growth rates of 47%, 43% and 30%, respectively. About 61,214 units were sold across these eight cities compared to 50,788 units in October-December quarter.

But year-on-year growth was still 5% lower, dragged down by weak market in Chennai and Bengaluru.

The Delhi-National Capital Region (NCR) contributed the most with sales of 14,983 units followed by Mumbai Metropolitan Region with 14,505 units. Sales in NCR and Mumbai grew by 24.5% and 23.6% respectively during the quarter. Bengaluru and Chennai bucked the trend of the big cities with housing unit sales falling 35% and 44, respectively.

“The impact of demonetization was transitory as it did result in subdued disbursement growth, particularly in the third quarter and part of the fourth quarter of the financial year under review.But by the end of the financial year, the individual disbursement growth trajectory began normalising, said Keki Mistry, CEO, HDFC, the largest non-bank mortgage lender. Mistry says in November and December property sales slowed immediately after demonetization. New applications, however, for home loans started growing from January which saw 21% growth over December. February had reported 16% growth over January; and March had 44% growth over February.

He added that the market has not just bounced back to normal, but it is the best time to buy property due to lower interest rates, declining property prices in some cities and government incentives.

Over the last one year, home loan interest rates have already eased more than 100 basis points, coming down to a six-year low of 8.35%. On Monday, State Bank of India reduced home loan rates further between 10 and 25 basis points. The revised home loan rate is at the lowest level since 2009, when it had announced a teaser rate structure.

Home prices fell but not as much one had expected after demonetization. Residential property prices in Chennai grew the highest by 5% from a year ago followed by Hyderabad with 4%. However, prices in Pune, Kolkata, and NCR declined by 3%, 2% and 1%, respectively.

In Mumbai Metropolitan Region, country’s most expensive property market, weighted average price rose 1% from a year ago to Rs 12,966 per sq ft. In NCR, prices eased 1% to Rs 4,855 per sq ft, while Bengaluru saw prices moving up 3% to Rs 5,584 per sq ft. Government moves to drive affordable housing has also led to higher numbers. “Both sales as well as the new supply are now driven by affordable housing segment,” said Pankaj Kapoor, MD, Liases Foras Real Estate Rating & Research.

On a sequential basis, the highest sales growth of 31% was in affordable segment with price range of less than Rs 25 lakh, while the ultra-luxury segment saw a 4% decline in sales. The contribution of affordable segment to overall sales in tier-I cities increased to 16% from 15% in October-December quarter. Within the affordable housing segment, maximum sales growth of 25% was recorded in Mumbai Metropolitan Region, followed by Pune with 19%.

Out of new launches, a maximum of 43% were seen in the cost bracket of Rs 25 lakh and Rs 50 lakh, which indicates that more developers are now catering to affordable housing demand. Collectively, 71% of the new launches were seen in cumulative cost brackets of Rs 25 lakh to Rs 1 crore. In affordable segment of less than Rs 25 lakh, maximum of 34% new launches were in NCR, followed by 18% in Mumbai Metropolitan Region.

Unsold stock across these markets has declined marginally by 0.3% on sequential basis. This is attributed to healthy sales and lower new launches during the quarter.

Among key markets, Ahmedabad, Hyderabad and NCR markets witnessed a 3% decline in unsold stock, but Chennai, Kolkata and Pune witnessed a 3% increase in unsold stock. MMR and Bengaluru saw negligible changes in unsold supply.

Weighted average price across tier-I cities witnessed a marginal decline on sequential basis. In Pune, Hyderabad, Kolkata, and NCR, prices dropped marginally by 1%.

Source:Economic Times


Please enter your comment!
Please enter your name here