With the coronavirus pandemic creating worldwide panic, its impact on the Indian housing sector has also been cataclysmic with residential sales witnessing around 42 percent YoY drop in the first quarter of 2020 in the top-7 cities and a similar drop seen in the number of new launches, according to a report by ANAROCK.
Another report said that the residential market may take the longest time to recover from this setback as the coronavirus outbreak may lead to customers delaying their home purchases.
"The affordable/mid-income segment may recover relatively faster than premium housing projects," ICICI Securities said in a report.
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In Q1 2020, residential sales in the top 7 cities stood at 45,200 units, against 78,510 units a year ago. On q-o-q basis, housing sales fell by 24 percent. Around 45,200 units were sold in Q1 2020 – a significant decline of 42 percent YoY, and of 24 percent over the preceding quarter due to the COVID-19 pandemic. NCR, MMR, Bengaluru and Pune together accounted for 84 percent of the sales in the first quarter of the year, the ANAROCK report said.
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MMR and NCR also recorded a significant decrease in sales in this quarter vis-à-vis the other top cities. Sales in both regions decreased by 24 percent each over the previous quarter, clocking in at approx. 8,150 and 13,910 units respectively. As compared to previous year, housing sales in MMR reduced by 42 percent and by 41 percent in NCR.
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Sales in Bengaluru, Pune and Hyderabad decreased by 23 percent each over the previous quarter, with approx. 8,630 units, 7,200 units, and 2,680 units respectively. On yearly basis, the decline in the three major IT hubs stood at 45 percent, 42 percent and 50 percent, respectively.
Among new launches, yearly trends indicate that MMR and Pune recorded the maximum drop - by 61 percent and 56 percent respectively - while Chennai and Kolkata actually displayed positive trends with nearly 16 percent and 8 percent yearly rise, it said.
"Given the ongoing global healthcare calamity, it is no surprise that housing sales and new project launches across India's top-7 cities decreased both on yearly and quarterly basis. As expected, monthly data trends reveal that March – the month when most advisories and lockdown were imposed - saw a steep decline in both new launches and housing sales against the preceding two months. The lockdowns have stalled construction activity and will lead to project delays in the future, but this is a reality the sector must accept and live with," said Anuj Puri, Chairman – ANAROCK Property Consultants.
Residential property prices across the top cities remained stagnant in Q1 2020 over the previous quarter. On yearly basis too, there was no price movement, the report said.
"COVID-19 has brought daily routines to a halt. Inevitably, this has impacted real estate sales. Construction labourers have returned to their hometowns due to the fear of the pandemic. Taking this into consideration, project completion is also subject to how India revives from the current situation and how soon it bounces back," said Rahul Grover- CEO, SECCPL.
With construction already coming to a grinding halt, project completions are slated to be postponed and if this situation prolongs, the deployment of funds including the AIF, will remain on hold. Housing sales may see a sharp dip for at least the next one quarter as consumers' biggest priority currently is health/ safety and income preservation,” said Anurag Mathur, Chief Executive Officer, Savills India.
“The short- term impact has been on sales velocity. We see a delay of around seven to eight months in project completion on account of supply disruptions due to the coronavirus outbreak and the National Green Tribunal ban on construction last year across the region," said Amit Modi, president-elect, CREDAI Western UP and Director, ABA CORP.