Over 53,000 residential units in India’s top seven cities were sold in the second quarter of 2022, more than doubling from a year earlier, as the pandemic ebbed and economic activity recovered.
Sales of homes priced over Rs 1.5 crore more than tripled in April-June from a year ago. The most sales in this price bracket were reported in the National Capital Region and Mumbai, Jones Lang LaSalle said in a report on July 13.
Apartments priced above Rs 1.5 crore accounted for 15 percent of sales in the quarter. The higher level of residential sales in the premium category reflected increased demand for bigger homes and the return of buyer confidence.
Prices moved up by 3 to 7 percent across all cities from a year earlier as developers partially passed on the increase in input costs and interest rates rose. This may result in some cooling down of sales in the short term, according to JLL’s Residential Market Update - Q2 2022.
Bengaluru and Pune
Apartments in the price bracket of Rs 50 lakh to Rs 75 lakh still commanded a larger share – 28 percent – in the residential market during the quarter. The most sales in this segment took place in Bengaluru and Pune, according to JLL.
On a sequential basis, overall sales increased by 3 percent during the quarter. Mumbai was the largest contributor to sales (23 percent), followed by Bengaluru with 21 percent and the NCR with 19 percent, the report said.
In the plots and villa categories, 6,013 residential units were sold across the top seven cities in April-June, mostly in the southern cities of Bengaluru, Chennai, and Hyderabad.
“India’s residential market has shown remarkable resilience in the last year. Sales of more than 105,000 units were recorded in H1 2022, which is an increase of 119 percent Y-o-Y as compared to H1 2021. This certainly indicates that the market sentiments are improving compared to the previous year,” said Siva Krishnan, head-residential, India, JLL. “Sales got a boost from many factors including lower Covid-19 cases, pickup in economic activity, and a stable employment scenario. The residential market has charted a new chapter of growth in H1 2022.”
Prices move up
The increase in input costs and strong demand caused residential prices to appreciate, with capital values rising 3-7 percent Y-o-Y across all cities except Hyderabad, where price growth was clocked in double digits.
“Developers have partially passed on the input cost increases, which are now reflected in the current residential prices,” said Samantak Das, chief economist at JLL India. “New launches also entered the market at higher prices. With interest rates in an upcycle, costs for owning a house are likely to increase further. This may cause some short-term deflation in demand but with changing dynamics around home ownership and with interest rates still on the lower side, residential demand is likely to remain on its growth trajectory.”
Mumbai dominates new launches
More than 63,000 units were launched in April-June, an increase of 6 percent from the previous quarter and more than doubling from a year earlier.
Mumbai dominated with a 27 percent share in new launches, followed by Hyderabad and Pune, which contributed 25 percent and 21 percent, respectively.
Quarterly launches were higher on a Q-o-Q basis in the NCR, Hyderabad, Mumbai and Pune. The quarterly trend declined in Bengaluru, Chennai, and Kolkata.
In the plots and villa segments, 8,056 units were launched across the top seven cities and got good responses from buyers.
Unsold inventory
Unsold homes across the seven cities increased by 2.1 percent on a Q-o-Q basis as new launches outpaced sales. Mumbai, the NCR, and Bengaluru together accounted for 60 percent of the unsold stock.
An assessment of years to sell (YTS) showed that the expected time to liquidate the stock declined to 3.6 years in Q2 from 4.2 years in the preceding quarter, the report said.
The percentage of apartments sold versus the total available inventory was at an average of 18 percent at a pan-India level in the first six months of 2022. This is an indicator of how the markets performed on a normalised basis, accounting for varying levels of unsold inventory across all cities.
This figure was the highest in Pune (28 percent) with Bengaluru and Kolkata (21 percent) a joint second. Both Pune and Kolkata, which are smaller markets in terms of absolute sales of apartments, performed much better on a normalised basis.
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