Growth fuelled by flexibility in payment plans by developers, lower interest rates and stamp duty waivers
In what could be termed as green shoots of recovery during the COVID-19 pandemic, sales across Tier I cities have recovered by 60 percent in the second quarter of 2020. The maximum increase was observed in Kolkata which was 68 percent followed by Ahmedabad by 64 percent, MMR and Bengaluru by 60 percent each, says a report by Liases Foras.
Tier I cities have recorded sales of 42,297 units in the Sept quarter (Q2 FY 20-21) which is a 60% increase from the June quarter when the sales were 26,403 units.
On a year-on-year (YoY) basis, the overall sales across tier I cities is 37 percent lower than last year during the same period. Sales in NCR and Bengaluru witnessed maximum decline of 47 percent and 46 percent on a YoY basis followed by Ahmedabad (37 percent) and Kolkata (32 percent), says the report titled Residential Real Estate Market Report – Tier 1 cities Q2 2020-21.
“The growth is driven by the offers and payment flexibility doled out by developers. Along with these offers, lower interest rates, stamp duty waivers are drawing homebuyers. It is almost after 15 years that everything is favouring the buyers and their affordability. It is truly a buyers’ market and we anticipate the coming quarters and festive season will see the highest ever sales in the residential market in India,” said Pankaj Kapoor, founder and managing director at Liases Foras.
On a quarterly basis, sales in NCR had increased by 59 percent when the maximum recovery was witnessed in Faridabad by 203 percent followed by Gurugram (123%), Ghaziabad (37%), Greater Noida (23%) Bhiwadi and Noida each by 17 percent. Unsold stock was reduced in all suburbs except Faridabad while Gurugram witnessed the highest drop of 17 percent.
On a YoY basis, sales witnessed a significant drop in all suburbs except Faridabad which showed 100 percent increase in sales (as there were only 400 units in the market). Sales declined maximum in Bhiwadi (56 percent) followed by Gurugram (55 percent), Greater Noida (52 percent), Ghaziabad and Noida by 38 percent each. Unsold stock shrunk in Gurugram by 22 percent followed by Bhiwadi (16 percent), Faridabad (12 percent), Noida (11 percent), Greater Noida and Ghaziabad by 7 percent each.
As far as launches across cities are concerned, new launches recovered by 68 percent in September 2020 at 18,591 units when compared to last quarter. The new launches are still 70 percent lower than those of last year's during the same period, the report said.
New launches increased by 68 percent in September compared to June. The maximum revival is witnessed in Hyderabad (658 percent) followed by Kolkata (326 percent), MMR (238 percent) and Pune (164 percent).
But on a year-on-year basis, new launches decreased by 70 percent.
New launches in Chennai witnessed maximum decline of 86 percent followed by Kolkata (81 percent), Bengaluru (80 percent), Hyderabad (78 percent), Pune (76 percent), Ahmedabad (64 percent), NCR (63 percent) and MMR (58 percent), it said.
Unsold units decreased by 3 percent on a quarter-on-quarter basis. The current unsold across top 8 cities stands at 932,767 units. The unsold stock has decreased across the cities due to fewer new launches.
The consolidated tier 1 cities unsold stock decreased by 3 percent in Q2 FY 20-21. It decreased the maximum in NCR (5%) followed by Pune, Ahmedabad and Kolkata by 4 percent each. Unsold inventory across tier I cities decreased due to few new launches and sales being in the higher side than the new launches.
However, on a year-on-year basis, unsold stock in Tier I cities decreased by 4 percent in September as compared to the same period in 2019. NCR showed the maximum reduction by 11 percent followed by Kolkata and Hyderabad by 10 percent and 8 percent. Only Pune witnessed a growth of 1 percent.
Months inventory reached 66 months in the September quarter from 109 months in the previous quarter, which is a 39 percent drop. Although, when it is compared to 2019 for the same period, it is still 54 percent higher, the report said.
As far as movement in prices across cities is concerned, the weighted average price across Tier I cities remained stable in the second quarter of the financial year 2020-2021. Prices remained stagnant in Chennai, Kolkata, NCR and Pune. Price in MMR reduced marginally by 1 percent and increased by 2 percent each in Ahmedabad, Hyderabad.The YoY weighted average price across Tier I cities remained same as compared to a year ago. Chennai exhibited maximum increase in prices by 3 percent followed by 2 percent in Hyderabad. Prices dipped in MMR (3 percent), Kolkata (3 percent) and Pune (-1 percent). They remained stable in Bengaluru and NCR.