With 1.61 lakh units sold till now in 2022, apartment offtake to scale pre-Covid levels

As many as 1.61 lakh housing units were sold between January and September and, with the  onset of the festive season, strong sales are expected, taking the yearly offtake beyond 2 lakhs, predicts JLL.

The January-September sales figure for 2022 can be compared with the 2014 number when 165,791 units were sold. Sales stood at 1.28 lakh units in 2021, 74,000 units in 2020, and 1.43 lakh units in 2019, according to a report by JLL titled, Residential Market Update – Q3 2022.

Data pertains to the top seven cities of Delhi NCR, Mumbai, Pune, Kolkata, Bengaluru, Hyderabad, and Chennai. Mumbai covers Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai. The study was limited to apartments only. Rowhouses, villas, and plotted developments were excluded from the analysis.

On a sequential basis, sales improved by 7 percent during the third quarter of 2022 with 56,658 units sold. In fact, this is the highest quarterly sales since the fourth quarter of 2010 when sales scored 59,825 units.

The maximum growth in annual sales was witnessed in Kolkata at 121 percent. As many as 4367 units were sold in Q3 this year, compared to 1,974 units a year back, thanks to a low base effect, extension of the stamp duty cut until December 2022, and an increasing sales velocity of affordable housing units launched in peripheral locations.

“We have witnessed a pick-up in sales due to enhanced consumer confidence amid steady revival of the Indian economy depicting immense growth potential of the residential market. Projects launched by reputed developers witnessed good traction by end users," said Siva Krishnan, MD and Head of Residential Services, India, at JLL.

"The larger markets of Bengaluru and Mumbai led the sales in the quarter contributing 41 percent of the total quarterly sales as they also saw substantial launches. This was followed by Delhi NCR, which contributed 19 percent of the quarterly sales. If we analyse the quarterly sales growth data, except Mumbai all the cities have seen an increase in sales as compared to the previous quarter,” he said.

The strong consumer demand is manifesting itself in the form of strong sales in the affordable and mid categories as well as in the premium segment. While 51 percent of the sales in Q3 of 2022 came from the apartments in the price bracket of up to Rs 75 lakh, it is also pertinent to note that apartments in the Rs 1.5-crore-plus level had a considerable share of 19 percent. The healthy offtake of units in the premium segment manifests the rising demand for bigger homes with good amenities.

“Due to cost-push inflation and robust demand, there is a rise in residential prices with the capital value showing a 3-11 percent YoY increase across all cities. New launches have also entered the market at higher prices in some cities. Hyderabad witnessed the maximum appreciation in prices to the tune of 11 percent on a yearly basis while in Pune prices increased by around 3 percent," said Samantak Das, Chief Economist, and Head Research & REIS, India, JLL.

"Also, the increase in the repo rate has resulted in an increase in mortgage rates. However, the interest rate after this hike would be still below what the homebuyers had to pay 8 to 9 years back. We believe that home loan interest rates inching towards 9 percent and above may result in moderation of housing sales growth in the medium term,” he said.

New products continue to see an uptick

With the festive season on, developers continued to launch residential projects to tap into the growing demand by home buyers. The top-seven cities under consideration witnessed new launches of 62,000 apartment units in Q3 2022, an increase of 3 percent QoQ. The majority of the launches were seen in Hyderabad at 27 percent, followed by Bengaluru at  23 percent, and Mumbai at 21 percent.

More than half of the launches were in the price bracket between Rs 50 lakh to Rs 1 crore. Premium segment apartments in the price bracket of above Rs 1.50 crore saw 11 percent of the launches in the quarter.

In Q3 of 2022, unsold inventory across the seven cities increased by 1.3 percent on a QoQ basis as new launches outpaced sales. Mumbai, Bengaluru, and Delhi NCR together account for 63 percent of the unsold stock. An assessment of Years To Sell (YTS)  shows that the expected time to liquidate the stock has declined from 3.6 years in Q2 of 2022 to 3.1 years in Q3 of 2022, an  indication of robust sales growth.