MUMBAI: A combination of stagnant property prices over the past two years and recent reduction in interest rates has led to a 15% year-on-year jump in home sales across top 8 cities in the country to 78.2 million sq ft in the quarter ended September.
Sales were dominated by Mumbai Metropolitan Region and the National Capital Region that have posted 39% and 11% growth, respectively, on-year basis, showed data from Liases & Foras. What’s more, the improvement in sentiment was seen despite the period of Pitra Paksh, which is considered inauspicious for buying a property.
“This is the best September quarter sales performance we have seen over the past five years. Time correction has certainly helped buyers improve their affordability .The ongoing Diwali quarter is slated to be even bigger given the improvement in sentiment and economic growth. Housing loan interest rates have eased to nearly 6-year low and that is helping drive the enduser demand,“ said Pankaj Kapoor, MD, Liases Foras Real Estate Rating & Research.
State Bank of India, the country’s largest commercial bank, has reduced its home loan rates to 9.1%, the lowest in six years as part of its festive scheme. The move is coming bang in the middle of a busy real estate season and is likely to be followed by several other lenders resulting in lowering borrowers’ home loan installment burden.
The weighted average price across the eight Tier-I cities remained stable over the quarter. However, weighted average price rose 3% over the past one year. Around 30-40% of the sales were recorded in projects that are nearing completion, indicating home buyers’ preference for such projects on the back of worries over delivery delay.
“With the onset of festive season, the last quarter has seen steady response from home buyers. Given the uncertainty over delivery delays, ready or nearly completed projects are being preferred. We have witnessed 40% rise in sales during the last two quarters at our ready project Vasant Oasis in Andheri. Apart from festive initiatives like broker engagement, referral programmes and tapping NRIs, factors like good infrastructure, location and possession has been aiding the sales,“ said Jitendra Sheth, CMD, Sheth Creators, that has given possession of its project Vasant Oasis in Diwali.
Both realty developers and brokers expect the seventh pay commission recommendations that are being implemented by the central government to provide a stable and positive impact on the economy in the form of increased spending for crea ting long-term assets.
“We expect a significant demand revival for our sector with improved sentiments in sight along with increased affordability for end users. With positive factors such as falling interest rates and the ongoing festival season, we are confident of meeting our guidance of new sales volume of 3.50 million sq ft this financial year,“ said JC Sharma, vice chairman of Bengaluru-based Sobha that registered sales of 855,662 sq ft valued at Rs.518 crore across its projects in nine cities during the second quarter.
The residential sales growth momentum has spilled over to the ongoing festive quarter as well and developers have already started reporting relatively better numbers. On Wednesday , Godrej Properties announced that it has sold over 6 lakh sq.ft. of villas with a booking value in excess of Rs.300 crore in a single day at the launch of its first project, Crest, at its 100-acre township Godrej Golf Links in Noida.
Pirojsha Godrej, MD & CEO of Godrej Properties, reckons that the market may be weak but good projects from strong developers will continue to do well. The combination of a high quality project with a vast amount of lifestyle amenities, a good location, and a strong brand has helped the project receive robust response.
“It is hard to predict the exact timing of a turnaround, but we certainly expect the real estate sector to do very well over the next decade,“ he said.
Not only the affordable segment with units priced up to Rs.50 lakhs showed a higher demand during the quarter, but also the luxury segment with apartments priced over Rs.2 crores witnessed a 38% annual growth in demand. Mumbai Metropolitan Region, NCR and Bengaluru were the biggest contributors to sales.
New launches in Bengaluru have dipped by one third compared with the last quarter. This shows developers are concentrating more on offloading existing inventory. Unsold stock across tier-I cities climbed 12% and was attributed to new launches with maximum increase seen in Kolkata, followed by Ahmedabad and MMR. Owing to the steady pace of sales, the month’s inventory dropped across most locations with the exception of Chennai and Kolkata.
Credits ET Realty