Residential sales in top 8 cities grew 13% in 2017-18: Report

Affordable housing continued to be the mainstay of the demand as the contribution of this segment to the overall sales in tier I cities

MUMBAI: Residential sales across top 8 tier I cities of India has grown 13% during the financial year 2017-18 (April-March) with Mumbai Metropolitan Region witnessing maximum growth of 25%, showed data from Liases Foras Ratings & Research.

Affordable housing continued to be the mainstay of the demand as the contribution of this segment to the overall sales in tier I cities including Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad stood at 18% during the fourth quarter.

The government has been pushing affordable housing through various schemes and incentives. Lower home loan interest rates and necessary impetus by the government to affordable housing has played a key role pushing sales in this segment.

The government has supported the housing sector through affordable housing fund, lower Goods & Services Tax (GST) rates, increased tenure of loans under Credit Linked Subsidy Scheme (CLSS) of Pradhan Mantri Awas Yojana (PMAY) and extended income tax benefits to apartments of carpet area of 645 sq ft.

Mumbai was followed by Delhi-National Capital Region with 19% increase in sales for the year. In south zone, Chennai and Bangalore have shown a slow down with sales numbers showing a drop of 15% and 5%, respectively while Hyderabad witnessed a growth of 17%.

On year-on-year basis, new launches across these top 8 markets have declined in most cities except in Mumbai, Hyderabad and Kolkata where launches grew 42%, 53% and 29%, respectively.

With a growth in sales and drop in new launches the unsold inventory in the tier 1 cities have dropped by 3% from a year ago to 9.29 lakh units as on March end.

During the fourth quarter ended March, residential sales across these tier I cities increased by 14% with Hyderabad emerging as the leader with a 33% increase followed by Bangalore with 30% rise, MMR with 19% growth and 14% increase in Pune. Kolkata is the only city that witnessed a marginal decline of 1%.

During the fourth quarter, sales in affordable segment with price tag of less than Rs 25 lakh increased 24% from a year ago. Sales in the cost bracket of Rs 25 lakh to Rs 50 lakh increased by 4% on an annual basis. Sales in the cost bracket of Rs 50 lakh to Rs 1 crore increased by 17%, while sales in luxury segment with Rs 1 crore to Rs 2 crore rose 13%. Sales in ultra-luxury segment above Rs 2 crore rose 13%.

Weighted average price across tier I cities witnessed a muted increase of 1%. Marginal decline of 1% was observed in Pune and NCR while prices dropped by 4% in Chennai. Prices in Ahmedabad witnessed no change while a slight increase of 1% was observed in Hyderabad , Kolkata , MMR and Pune each, the data showed.

NCR led with the highest contribution to sales in the affordable segment with 26% followed by MMR with 23%, Ahmedabad with 20% and Pune with 15% of total sales in this segment. All 8 cities cumulatively sold highest in cost range of Rs 25 lakh – Rs 50 lakh, with sales of 35% of total sales, followed by cost range of Rs 50 lakh to Rs 1 crore at 30% of total sales.

Among regions, MMR contributed the highest to overall sales at 17,143 units or 25% of total sales followed by NCR at 15,326 units or 22% of total sales, the data showed.

During the quarter, MMR added the highest new launches, with a contribution of 25% followed by Bangalore 17% and NCR 11%. Among various cost segments, the cost bracket of Rs 50 lakh to Rs 1 crore witnessed maximum new launches amounting to 39% of total new supply followed by the cost brackets of Rs 25 lakhs to Rs 50 lakhs with 36% contribution.

The Rs 50 lakh to Rs 1 crore segment of MMR witnessed maximum launches of 5,545 units contributing 11% of the total new launches across eight tier 1 cities. Kolkata contributed 29% of the new launches in the affordable segment with less than Rs 25 lakh followed by MMR 25% and Pune 24%.

Source : https://realty.economictimes.indiatimes.com/news/residential/residential-sales-in-top-8-cities-grew-13-in-2017-18-report/64256679?photo_id=59863844

Five things that can raise consumer confidence

When the governor of Reserve Bank of India (RBI), Raghuram Rajan, announced a 25 basis points cut in repo rates, which is yet to translate into any significant rate cut in home loan interest rates, the general feeling was that it was too little, too late. However, few developers have maintained that a drop in interest rates may well trigger a rise in consumer sentiment but not significantly impact the buying decision.

Interest rates:

So what can banks do? Just wait around for the RBI to cut rates which today are predicted to drop and tomorrow to hold their levels? Why is the Indian home buyer hanging on to the sidelines waiting for a trigger? Banks have historically made old consumers pay more or for longer periods if home loan interest rates have gone up. But when rates drop, the beneficiaries have been only new customers. So this time consumers have decided to wait till the interest rates actually drop to attractive levels. If banks assure consumers that irrespective of whenever they took the loan, they can avail of lower rates when interest drops there may be a move in the right direction.

Real estate regulator:

Consumers have waited helplessly when the industry giants delayed projects and offered small or negligible penalty rates that too often delayed. In many cases force majure is invoked because authorities delayed approvals or some other unforeseeable factor prevented the completion of the project. A speedy passage of the Real Estate Regulatory Bill with local authorities as well as developers under its ambit would help change the scenario.

No speculative launches:

Consumers have been searching for smaller homes that fit their budget. PropIndex (Oct-Dec 2014), the India Apartment Index by Magicbricks, clearly showed that 1BHK units or houses worth Rs 20-60 lakh were in demand. However, the market is skewed towards larger 3 and 4BHK units. Instead of speculative development, Indian developers and the market would benefit from better market research by developers before projects are launched.

Rational market rates:

The industry is holding on to the rates at which properties have been launched or the last hike stands. However, investors have started buckling under the strain of a complete stoppage of sales for over a year now. The difference between listed prices and transacted values are growing. This bodes ill for markets and does not restore consumer confidence in the industry.

Rental laws:

The ones who can afford to buy property, don’t dare to put it on rent. Weak rental laws have impacted consumer confidence. The Model Rent Act, enacted a few years ago but not implemented, would be a good way to trigger a rise in consumer confidence and therefore raise sentiments.

Source: PropertyatNeoDevelopers.Wordpress.Com