Launches fall 45%, home sales decline 25% in July-September quarter: PropTiger report

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New Delhi, October 17, 2019: Project launches in India’s major property markets continued to fall in the second quarter of the current financial year and at the same time real estate developers’ attempt to arrest the downwards movement in home sales failed to yield the desired results, shows a report by PropTiger.com, part of Elara Technologies Pte Ltd, that also owns Housing.com and Makaan.com.

According to Real Insight, a quarterly analysis of India’s nine key property markets by PropTiger DataLabs, new project launches in the country declined 45% in the July-September quarter of the financial year 2019-20 (FY20) when compared to the levels seen in the same quarter last year. During the same period (Jul-Sep), home sales also reduced by 25% as compared to the corresponding quarter last financial year. Quarter-on-quarter (Q1FY20 vs Q2FY20) comparisons also showed decline in both sales and launches wherein new launches fell 32% and home sales declined by 23%.

A comparison of numbers between the first half of FY19 and FY20 also showed that home sales and new launches moved downwards. As compared to the sale of 170,715 units in the first half of FY19, only 151,764 units were sold in the same period in FY20, registering an 11 per cent fall. Similarly, as against the launch of 137,146 fresh units in the first six months of FY19, only 83,662 units were launched in India’s nine markets in the first six months of FY20, a fall of 39 per cent.

“New launches continued to show a downward trend in the September quarter even as the government continues to move towards a solution to the ongoing NFBC issue, a problem that has dried up a key source of finance for real estate developers in India. As buyers postponed their purchase decisions to time it with the festive season, sales numbers also fell during the quarter. While new launch numbers might continue to fall in the coming quarters due to the liquidity crunch, we expect home sales numbers to improve in the subsequent quarter, factoring in the higher purchase activity that normally takes place during the festival season.” says Dhruv Agarwala, Group CEO, Elara Technologies, the country’s only full stack real estate technology platform that owns PropTiger.com, Housing.com and Makaan.com.

Launches are mainly concentrated in Mumbai, Pune

As against 61,679 fresh units launched in July-September FY19, only 33,883 new homes were launched in the second quarter of this year. Of these, 41% units were in the affordable category i.e. units that are priced at Rs.45 lakh or less.

At a count of 10,425, the highest number of units was launched in Pune during the quarter, followed by 8,132 homes in India’s financial capital Mumbai.

New launches declined across cities other than Gurugram, which saw an increase in the number of launches.

Half the units sold during the quarter are affordable homes

A total of 65,799 units were sold during the quarter ending September this year as against 88,078 units during the corresponding quarter the previous year. When compared to the sales registered in the same quarter last year, the number this year declined across the cities covered in the report.

Interestingly, nearly half the units that were sold during the quarter are affordable homes.

At 21,985, the highest number of units was sold in the Mumbai market, followed by the sale of 13,644 homes in Pune.

Inventory stock declines 13% during the quarter

One silver lining for the sector was that unsold inventory in the top markets declined 13% y-o-y, primarily because new launches fell at a faster clip than sales did. As of September, builders in India’s nine top markets have an unsold stock consisting of 778,627 units, shows the report.  Notably, more than half of this unsold inventory is affordable stock.

A city-wise breakup shows that a large part of the unsold inventory is concentrated in Mumbai and Pune property markets. At 32,041 units, Hyderabad has the smallest unsold housing stock.

Pricing rally continues in Hyderabad

Barring Hyderabad where property prices have seen a jump of 15% y-o-y, prices have undergone only slight changes in other markets. However, only two markets markets have seen a downward movement in pricing in the past one year, Gurugram (-4%) and Chennai (-1%). Other markets saw prices appreciate by 2 to 4% y-o-y.

Over 4 lakh homes to be delivered in the second half of FY20

While over two lakh housing units were delivered between April and September this year, more than four lakh new units are expected to be delivered in the remaining half of this financial year, data show. Another 4.50 lakh ready-to-move-in homes are expected to hit the market by FY21.

The cities covered in the analysis are Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.