There could be a revival in sight for India’s housing sector, with home sales data showing marginal growth for the second straight quarter.
Home sales across India’s top eight cities increased 6% in the January-March quarter from that a year ago, helped by stagnant pricing, discounts from builders and launch of new projects at lower prices in some cities, according to a report by property research firm Liases Foras.
Sales in the National Capital Region were up 33% and that in Mumbai 12%, while Bengaluru saw sales drop 18%. Sales in Ahmedabad went up 32% while that in Chennai were up 25%, Hyderabad saw 20% growth and Kolkata 14% while Pune saw a 25% decline.
Prices remained flat in Mumbai while NCR saw a correction of 3% from a year ago, helping developers push their stock. Ahmedabad was the only city to witness double-digit growth in prices at 12%.
Compared to the previous quarter, 26% more new projects were launched in cities led by Mumbai and Bengaluru, with most of the launches being in the Rs 25-50 lakh price bracket.
Sales of apartments under Rs 25 lakh increased 46% in the past one year while sales in the Rs 25-50 lakh bracket grew 13%, indicating increasing affordability of homes.
Sales of apartments costing Rs 1-2 crore were down 9% while those of apartments costing more than Rs 2 crore were down 4% during the quarter. Unsold stock, however, increased 22% to 1,170.8 million sq ft from 1,125.2 million sq ft in the previous quarter.
“The gap between prices of apartments and affordability is reducing, which has helped sales. It is an end-user driven market today,” said Pankaj Kapoor, managing director of Liases Foras.
For the first time since January March 2014, the total sales across eight tier 1cities crossed 60,000 units.
Getamber Anand, national president of the Confederation of Real Estate Developers Associations of India said more people have started buying homes as prices have remained stagnant over the past two years across markets.
Falling interest rates are also helping. State Bank of India on Monday cut its home loan rate for women borrowers to 9.35% and 9.4% for all others. “When interest rates come down below 9%, there will be a further incentive for people to buy,” Anand said. “And combined with a good monsoon, Diwali should be very good this year,” he said.
Kapoor of Liases Foras said if builders in Mumbai, for instance, are able to trim property prices by a further 15-20%, home sales could improve to three times of the number today.
RBI Governor Raghuram Rajan had urged builders in late April to cut home prices in order to stimulate housing demand. Builders had, however, categorically said that there is very little room for any further price cuts.
Akey reason why homebuyers have shied away from buying homes is massive delays in the delivery of apartments across the country that has led to buyer activism against builders.
Builders who have been able to mitigate this and showcase a strong delivery track record have been able to sell their apartments at improved prices while others have been struggling.
Niranjan Hiranandani, managing director of Mumbai-based Hiranandani group, said buying is taking place but much depends on the rains for this to sustain.
“The economy is definitely growing; money is being spent on infrastructure. If there are good rains, the impact on home sales should be even higher,” he said.