Residential property sales up 44% in Jan-Mar 2021 across 8 cities
Mumbai and Pune lead the sales and launches for top markets of India
The residential market in India has seen a steady rise in both sales and launches in the January-March quarter with as many as 71,963 units sold during the first quarter of 2021 which is 44% more than the same quarter last year, a report by Knight Frank India said.
Launches were recorded at 76,006 units. Mumbai and Pune led the table in both launches as well as sales due to discounts in stamp duty charges, said a report by Knight Frank India.
“71,963 units were sold during Q1 2021, 44% more than in Q1 2020. This healthy growth in sales also encouraged developers to launch new projects which are reflected in the 76,006 units launched during the quarter, substantial growth of 38% year-on-year,” Knight Frank India said in a statement.
Quarterly sales volumes have steadily improved since Q2 2020 and have surpassed the 2019 pre-COVID quarterly sales average in Q1 2021. Considering that this is the second consecutive quarter to cross the 2019 quarterly sales average, we believe that the market is recovering well, if not having done so already.
Mumbai and Pune led the table in both launches as well as sales. These two markets benefited from significant regulatory impetus in the form of discounts in stamp duty charges that led to significant improvement in sales velocity.
While end-users were keen on taking advantage of the reduced stamp duty regime, developers also thought it right to take advantage of the said growth to launch new projects. In the last few weeks of Q1 2021, Karnataka also doled out stamp duty sops to home buyers for residences costing upto Rs 4.5 million. However, the impact of this may only be seen in the subsequent quarters, the report said.
The increasing sales volumes have also arrested the intensity of the YoY fall in residential prices of most markets while Hyderabad and the NCR have seen marginal growth in prices compared to a year ago. The incidence of developers giving indirect discounts/ freebies has been a key factor in spurring sales in 2020 but this has been observed to have reduced significantly in Q1 2021.
In the Delhi-NCR market, sales were up 24% at 6,731 units. Housing demand in Kolkata increased by 22% to 3,596 units during January-March 2021, while Ahmedabad saw a 34% rise in sales to 3,045 units, it said.
In fact, on a sequential basis (QoQ), housing prices have remained stable in most cities and recorded an increase in the case of the southern cities of Chennai and Hyderabad, it said.
Homebuyers were inclined to acquire ready or near-ready inventory to minimise completion risk. This is reflected in the average age of inventory which stayed at 16.7 quarters in Q1 2021 compared to 15.9 quarters in the year-ago period. This is also in line with developers focusing on liquidating older inventory before launching new products which have consistently helped reduce unsold inventory levels to 0.44 mn units in Q4 2020, 2% less than a year ago, the report said.
“Q1 2021 saw a significant rise in sales across the key markets, led by Mumbai and Pune – the two markets that received substantial backing from the state government in the form of reduced stamp duty. Other cities also recorded a rise in sales of homes due to a shift in attitude in homebuyers that has now started to prefer ownership.
“That coupled with home loan interest rates at multi-decade lows of sub 7%, a substantial correction in apartment prices, as well as the increase in household savings, seems to have convinced homebuyers that this was an opportune time to purchase their properties,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
Commenting on the second wave, Baijal said that “While the sentiments have remained largely positive in the first quarter leading to consistent rise in home sales, the recent spike in COVID-19 cases in the country has to be factored in for the future. We are yet to understand the complete impact of the ‘second wave’ on the economic activities and resulting wealth creation.”
