Affordable housing drives marginal revival in sales

Even though new launches have practically dried up, sales of residential properties, especially ready-to-move-in properties, seem to be picking up pace.

The affordable segment is still the top contributor, and prices seem to have risen 1-2 per cent in the residential real estate category, as per various industry data.

Sales across the top eight markets grew 4 per cent in the first quarter of FY2017-18 on a year-on-year basis, while sequential growth stood at 6 per cent, according to a report by real estate research firm Liases Foras.

The study said the realty market has now shaken off the impact of demonetisation and clocked a sales growth of 28 per cent post-demonetisation.

Additionally, the report said the affordable segment contributed 17 per cent to the overall sales, up from 16 per cent in the previous quarter. Sales in the price bracket of less than ₹25 lakh clocked the highest growth at 16 per cent on a yearly basis, while properties in the price bracket of ₹50 lakh-1 crore witnessed a drop of 3 per cent.

Pankaj Kapoor, MD, Liases Foras, said: “The growth is mainly on account of the traction in the affordable segment of the market. We have seen both demand and supply flow in the segment, making it an end-user-friendly market. We are witnessing good numbers despite RERA (Real Estate Regulatory Authority Act), GST and demonetisation — a sign that augurs well for the market in future. What has also helped the market overall is the stable prices over the past few years, giving buyers a benefit of time correction.”

Among the top eight cities, Kolkata witnessed the highest growth in sales at 27 per cent in the first quarter of FY2017-18 on a yearly basis, while Chennai saw a massive dip of 36 per cent.

Liases Foras said MMR Group made 24 per cent of the overall sales, recording the highest number of units sold in the past seven years at 15,824.

The report said the weighted average price in tier I cities grew 2 per cent and 1 per cent year-on-year and quarter-on-quarter, respectively. The average price across cities stood at ₹6,764 per sq ft, up from ₹6,660 per sqft.

A Knight Frank India half-yearly report, across eight cities for the period January-June 2017 (H1 2017) also said that barring Chennai, new projects dried up in all the eight cities.

H1 2017 witnessed the resurrection of affordable housing across India with 71 per cent of the launches under the ₹50-lakh price segment, up from 52 per cent during the same period last year.

NCR, Kolkata, Pune and Ahmedabad drive the revival of affordable housing projects with around 80 per cent of launches in these cities in the sub-₹50-lakh segment.

Knight Frank said there has been a surge in inventory in the ‘ready for possession’ category.

A Collier report also indicated that even though new launches may decline, sales are likely to pick up during the festival season due to higher optimism among buyers after RERA. “Supply of new projects will remain restricted in the market in the short to medium term, but this will help mitigate the oversupply situation in most markets. Also, the prices have been stabilised in most markets, and any further reduction is unlikely. Thus, buyers should expedite their buying decisions and take advantage of the lower interest rate regime,” said Surabhi Arora, Senior Associate Director, Research, Colliers International India.

A study by real estate data research firm PropEquity, too, noted that prices have increased 1 per cent to ₹6,287 per sqft from ₹6,205 PSF as developers were able to finally sell their earlier inventory, and focussed on delivering earlier projects before RERA kicked in.

Housing demand (absorption) across key cities increased 2 per cent to 31,539 units from 30,920 units.