The residential real estate market seems to be picking up where the slump has left it. As per a just-released report by JLL India, sales of residential units in H1 2019 increased by 22 per cent compared to the corresponding period in 2018.
The gradual increase in the residential sales does present a hopeful picture for the real estate market. The last five years saw the combined effects of demonetization, RERA and GST playing havoc in the segment. However, things have started to pick up.
The year 2019 so far saw cuts in GST as well as RBI cutting down interest rates thrice a year. The ripple effects of these reforms were clearly visible as the gradual revival in home buyers’ confidence and improved affordability has aided the property sales.
Overall, a total 78,247 apartments were sold during H1 2019 across top seven cities (Delhi NCR, Bengaluru, Mumbai, Kolkata, Chennai, Hyderabad and Pune). The numbers are encouraging but yet to touch H1 2016 figure of 80,171 sold apartments.
Here are the key highlights of India residential market update of H1 2019:
· It is Hyderabad that recorded the highest growth in sales at 65%, followed by Delhi NCR at 42% on a year-on-year basis.
· Due to government’s push to affordable housing along with reduction of GST from 8 percent to 1 percent, affordable housing was seen leading the sales. Affordable housing and mid-income segment dominated the sales as the share of these were about 58 percent across these top cities.
· Developers seem to be focusing on completion and delivery of already launched projects. The new launches of residential units saw a decline of 11 percent on Y-O-Y basis in the top seven cities except Mumbai and Bengaluru. Maximum launches were seen in mid and affordable segments.
· Due to reduced supply by developers and focus on delivering projects, prices remained more-or-less stable across key locations.
· The three key markets of Mumbai, Bengaluru and Delhi NCR continued to account for more than 60% of the total sales.
· An assessment of years-to-sell (YTS) and average construction period across cities reflects a parity, indicating optimal signs of inventory management. The average YTS at 3.4 years across the seven cities compares favourably with the average construction period for a typical residential project across these cities at 3-4 years. The only exceptions to this trend was Delhi NCR and Kolkata.