The spurt rides on supportive measures like stamp-duty cuts undertaken by various state governments, Crisil said in a report.
New home sales have seen a surprise surge in the last couple of months, making the pandemic-led disruption look like a blip, rating agency Crisil said in a report on November 19. Houses sold in Mumbai and the rest of Maharashtra are 1.1 - 1.3 times higher compared with January this year, the agency said.
The spurt rides on measures taken by governments in key states. Maharashtra, for instance, reduced stamp duty from 5 percent to 2 percent up to December 2020 and to 3 percent for January-March 2021. Karnataka, too, has cut stamp duty from 5 percent to 3 percent for properties priced between Rs 21 lakh and Rs 35 lakh, Crisil said.
"A favourable, buyer-centric market has created an opportunity for first-time homebuyers and fence-sitters as well as resale flat buyers. Renewed interest of non-resident Indians in sales is also being observed," Crisil said.
Affordability across India’s Top-10 cities has improved by up to 35 percent over the past five years, given favourable interest rates and reduction in property prices, Crisil said.
The stamp duty cut has improved affordability, the agency said. Among major cities, affordability improvement in the Mumbai Metropolitan Region (MMR), National Capital Region and Pune is higher than in metros such as Bengaluru and Hyderabad because of pricing pressure.
Quarterly results of key listed players indicate that the second quarter of this fiscal saw better-than-envisaged growth. “And in most cases, bookings for these players touched pre-Covid levels. The momentum is expected to continue in the second half of this fiscal,” Crisil said in the report. Developers in southern India have performed better than the rest of the country as these have a larger share of branded developers.
The decline in the first half of the financial year for the top seven listed developers has been in the range of 10-20 percent compared with a decline of 50-60 percent in top 10 cities, indicating a shift towards key developers. This trend was visible before the pandemic struck and is expected to continue over the second half.
While the overall rebound in real estate demand in October was faster than was expected, its sustenance after the festival season will be a monitorable, Crisil said.On a full-year basis, Crisil estimates overall primary sales to witness a decline of 40-50 percent in the top 10 cities. With ready-to-move constituting 10-20 percent of the total inventory in key cities and upcoming supply this fiscal at similar levels, capital values are likely to remain under pressure at least for the rest of this fiscal, the agency said.