Home Sales Drop In Top Seven Cities In April-June, Says JLL
Home sales in India’s top seven cities dropped in the quarter-ended June over the preceding three months as the deadlier and more contagious second wave of Covid-19 infections raged. Demand, however, jumped over a year earlier, aided by a low base.
Combined housing sales in Bengaluru, Chennai, Delhi-National Capital Region, Hyderabad, Kolkata, Mumbai and Pune declined 23% sequentially to 19,635 units in the April-June period of 2021, according to property consultancy JLL.
Less stringent lockdowns and increase in the pace of vaccination showed an improved resilience, the property consultant said in a report. That also cushioned it from the pandemic's second surge.
Residential sales had dropped by a record 61% quarter-on-quarter in Q2 2020.
In the first quarter of 2021 calendar year, home sales increased 17% sequentially.
Cumulative residential sales across the top seven cities surged 83% over the prior year in Q2 2021.
In the first half of 2021, housing sales rose 18% year-on-year to more than 45,000. That, the report said, presents a clear sign of demand and buyer confidence coming back to the market.
Focus on mid and affordable segments continued in the first half of 2021, with 72% of the new launches in the sub Rs 1-crore category, Siva Krishnan, head-residential, India at JLL, was quoted as saying in the report. “While the focus on these price segments is expected to continue, developers are likely to consider new launches of larger-sized apartments in order to capture changing consumer preferences.”
A survey by the Confederation of Real Estate Developers’ Association of India, however, showed 95% of 4,813 developers from 217 cities see project delays as inevitable because of the second Covid-19 wave. Nearly 92% of the companies surveyed face worker shortage at sites, 83% are working with less than half the workforce, and over 82% of firms are encountering project approval delays.
“There is no denying the fact that the second Covid-19 wave dented the market following a good recovery curve," according to Samantak Das, chief economist and head research & REIS, India, JLL. The impact, however, was muted compared to the same period last year, he said. "Most of the changes observed in the sector have been structural in nature and demand for homes is only expected to increase.”
“If the downward trajectory in Covid-19 cases is sustained, the sector is expected to make a healthy recovery in the second half of 2021,” Das said.
The top seven cities witnessed a 20% sequential decline in new launches at 27,057 units in the second quarter of 2021.
“As the second Covid-19 wave intensified, several developers deferred new launches and focused on the completion of under-construction projects and clearing their existing inventory,” the JLL report said. “Nevertheless, compared to the same period last year, new launches almost doubled. Despite states imposing lockdowns of varying intensities, developers launched projects across the seven cities.”
On an average, new launches of more than 35,000 units were witnessed every quarter between Q1 2019 and Q1 2020, the report said. In the Covid-era (Q2 2020-Q2 2021), this decreased to 23,000 units.
New launches, according to the report, are expected to go up in the second half of 2021 as developers monetise their land banks. “A reversal in trends with developers launching larger-sized houses and apartments to capture the changing preferences of consumers in the post-Covid era is also possible.”
The first half of 2021 witnessed fresh launch of 61,010 residential units, a jump of 10% over the prior year.
New launches outpaced sales in Q2 2021. That increased unsold inventory at various stages of construction across the seven markets increase from 470,750 units to 478,172 units.
In Q2 2021, property prices remained stable over the previous quarter across all the seven markets, JLL said.
“Developers in certain markets have been providing moderate price discounts, attractive freebies, including payment schemes such as no equated monthly installments for a year to boost sales,” it said.
Prices, according to JLL, are expected to be largely range-bound across most of the markets in the short to medium term.