Home Sales, New Launches Pick Up In First Half Of 2021: Knight Frank

A gardener prunes plants outside a residential apartment building  on the outskirts of Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Home Sales, New Launches Pick Up In First Half Of 2021: Knight Frank

Home sales in India’s top property markets rose in the first six months of the year even as the Covid pandemic’s second wave disrupted the economy.

While home sales rose 67% over a year earlier in the top eight cities during this period, launches increased 71%, according to data from Knight Frank India. That, however, came on a low base as India went into a complete lockdown for over three months since March last year, stalling all businesses except essential services.

As many as 99,416 units were sold in the first half of 2021 across top markets, while new launches stood at 1,03,238 units, the property consultancy said in its half-yearly report that studied Mumbai, Delhi-NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad.

Improved consumer perception of owning a house was supported by low home mortgage rate, competitive house prices and developer-driven flexible payment schemes, the report said. While the period of the second wave in 2021 coincided with that of the first wave last year, it was less severe on the residential real estate market despite its "extremely morbid potency", it said.

“The second wave of Covid-19 infections has impeded this momentum but should be seen as more of a speedbump as YoY growth in market volumes remains strong in half-yearly and quarterly terms in the January to June 2021 period,” Shishir Baijal, chairman and managing director of Knight Frank India, was quoted as saying in the report.

The limited period stamp duty cut which spiked home sales in Mumbai and Pune adequately demonstrates the need for policy-level intervention to revive the residential market, Baijal said. “Going by the tremendous success of the stamp duty cut in Maharashtra, other states may also consider similar demand stimuli at appropriate times that will not only help sales velocity but also propel economic activity.”

Mid- And High-End Sales Rise

According to Knight Frank, demand for homes costing less than Rs 50 lakh fell by around 500 basis points over a year earlier, comprising 42% of all sales during January-June. Units worth more than Rs 1 crore contributed 19%, while properties sales of units between Rs 50 lakh and Rs 1 crore improved by 400 basis points to 39%.

The report cited the threat of job loss, reduced income, rising consumer inflation and other pandemic-related challenges for the decline in the proportion of affordable homes (less than Rs 50 lakh) in overall demand.

New Launches Up

New launches rose, led by Mumbai—India's most-expensive property market—and Pune.

Fresh projects increased significantly in all markets as developers took measures to capitalise on higher demand. A majority of the new launches were recorded in the first quarter of the year, while the impact of the second wave in the next three months was felt in equal proportion by developers which impacted launches as well, it said.

“Q2 2021 accounted for a little more than a fourth of all launches in the first half of 2021," it said. "However, a comparison with the pandemic-affected quarter from a year ago shows that Q2 2021 has recorded a YoY growth of 388%.”

Prices Remain Stable

Prices remained largely stable, falling by an average of 1-2% over a year earlier across markets.

Price levels in four of the eight markets remained at the same level or rose marginally in the first half of 2021 and remained unchanged in one, according to the report. While developers offered flexible payment schemes to push sales, direct discounts were markedly lower during the first half of 2021, it said.

Unsold Inventory Falls

Unsold inventory fell over a year ago, albeit at a modest rate, reflecting the healthy pick-up in sales right across markets, the report said. “These markets have shown excellent promise in the demand appetite that had been holding back due to the second phase of the pandemic.”

Outlook

The last four quarters marked by the pandemic have given rise to different sets of considerations for home buyers which has led to a renewal of buyer interest, Baijal said.

“…..Barring the affordable segment which was impacted by the uncertainties arising from the economic disruptions of the pandemic, the strength of the market was adequately demonstrated," he said. "We expect the residential segment to remain buoyant due to the attitudinal shift in mindsets of potential buyers and as and when normality returns, we expect the sales volumes to pick up pace.”

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