Defying previous election year trends when sales and new launches remained muted during this period, the first quarter of 2019 has witnessed both housing sales and new supply rise driven by several measures by the government including sops offered in the interim budget, GST rate cuts and lowering of home loan rates post the Reserve Bank of India’s recent repo rate cut.
Residential property sales rose 58% from a year ago to 78,520 apartments during the quarter ended March across top 7 cities. The jump in sales was led by Mumbai Metropolitan Region (MMR), Pune and Delhi-National Capital Region (NCR) with an increase of over 95%, 80% and 52%, respectively, showed data from ANAROCK Property Consultants. Of the total new supply, affordable housing saw the maximum share at 44%.
The ripple effect of the NBFC crisis in the second half of 2018, coupled with the usually slow pre-election sentiment, according to experts, could have played spoilsport for both new launches and housing sales during this quarter. However, the various interventions by the government have had not only a buffering but a boosting effect.
“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," said 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.“
Around 78,520 units were sold in during the quarter with NCR, MMR, Bengaluru and Pune together accounting for 84% of the sales.
In terms of supply too, Pune and MMR were the top performers with new housing supply increasing by 538% and 183%, respectively. Pune added new supply of 17,520 units during the quarter, while Mumbai saw addition of 26,850 units.
Despite a 1% hike in stamp duty charges in Maharashtra from February, MMR and Pune markets performed significantly in terms of new launches and housing sales. According to 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 sentiment was a major kickstart.
The top 7 cities recorded new unit launches of around 70,490 units during the quarter, up 91% from a year ago. Key cities contributing to Q1 2019 new unit launches included Mumbai Metropolitan Region (MMR), Pune, Bengaluru and NCR, together accounting for 87% of new supply.
More than 45% of new supply was added in the affordable segment; while over 70% new supply was added in sub Rs 80 lakh price bracket, indicating that developers are aligning their offerings according to the current market dynamics. Bangalore added 9,070 units and of these around 64% new supply was added in sub Rs 80 lakh price bracket.
Average residential prices across the top cities remained stagnant in during the quarter when compared to the previous quarter, except in Bangalore and Hyderabad, where the average property prices increased by 1% each over the previous quarter and by 2% from a year ago.
According to experts, 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 less than Rs 45 lakh has resulted in more inventory from the premium budget henceforth being included in the affordable segment category - a major benefit to buyers.