Various measures taken by the government at the Centre as well as by several state governments to boost buyer confidence have started to show positive outcomes, with home sales in India’s eight prime residential markets showing a quarterly increase of 12% in the January-March quarter (Q1) of CY (calendar year) 2021 compared to October-December quarter of 2020, shows a report by PropTiger.com.
According to Real Insight – Q1CY21, builders sold a total of 66,176 homes in the primary market in the January-March quarter of 2021, a time marked with several state governments, including Maharashtra and Delhi, announcing stamp duty and circle rate reductions to boost buyer sentiment and housing sales.
When compared to Q1CY20, however, home sales in the markets covered in the analysis showed a decline of 5% from 69,555 units, something that can be termed marginal, considering that the January-March period in 2020 was the last quarter before the pandemic spread started in India, forcing the government to announce a nation-wide lockdown late in March 2020 that brought economic activity in the country to a standstill.
“As the economy gradually marches towards recovery, as reflected in global rating agencies and think-tanks revising India’s growth forecasts for 2021 and 2022, the residential real estate market in the country is also seeing a positive momentum on the back of various measures taken by the Centre and state governments, the RBI and the entire banking system (as demonstrated in home loan rate reductions). This positive change is visible in the first quarter through an increase in supply numbers, an indication that developers are more comfortable now with regard to liquidity support and buyer sentiment. Metrics on the demand side have also been largely stable with the job market opening up again in various industries, giving people the confidence to take advantage of a property market that is the most affordable for home buyers in years,” said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com.
“Though the recent surge in COVID infections concentrated in a few markets is a concern, we expect the residential market recovery to continue,” he added.
Supply increases 49% year-on-year
On the supply side, a total of 53,037 units were launched across India during the three-month period, which saw the Union Cabinet approving a Bill to set up a Rs 20,000-crore Development Finance Institution to offer long-term capital support for infrastructure development in India. This marked an annual growth of 49% in housing supply. A quarter-on-quarter (QoQ) comparison shows new launches declined 2% when compared to the last quarter of CY20.
Prices remained mostly stable except in Ahmedabad and Hyderabad
As expected, no extraordinary upwards movement was seen in average prices of property in the primary or new homes market. While annual growth remained largely flat or in low single digits in most markets, Ahmedabad and Hyderabad stood out, with 5% annual growth in average rates of property.
“The Maharashtra government’s decision to temporarily lower stamp duty on property registrations helped mitigate the steep decline in sales for the Mumbai and Pune markets that contribute the most to the national stock of unsold homes. The state government should have continued with the benefit of reduced rates to keep the sales momentum going. We also expect states like UP and Haryana to announce stamp duty and circle rate reductions in order to provide support to crucial housing markets of Noida and Gurugram in the National Capital Region,” said Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com.
“In a show of great intent to help buyer sentiment, almost all banks have lowered home loan interest rates to the 6.90% level. We expect this low rate regime to continue, as the Indian economy attempts to make a recovery from the pandemic-induced GDP contraction,” he added.