Mumbai, Pune account for over 50% home sales in October-December 2020

Housing sales in October-December 2020 registered a significant improvement with apartments in the sub-`75 lakh price segment driving demand as record low interest rates coupled with some states slashing circle rate and stamp duty attracted homebuyers. Developers also cashed in on the opportunity by introducing attractive offers which lowered the overall cost of units.

As per PropTiger.com, developers sold 58,914 units in the last three months of 2020, which is a 27% year-on-year (y-o-y) decline, but was 68% higher sequentially. Except Ahmedabad, all the other top eight cities saw an increase in housing sales when compared to the preceding quarter.

A breakdown of sales in terms of prices showed that houses in the sub-Rs 75 lakh category accounted for 73% of the total sales. A further break-up revealed that units in the Rs 45 lakh and below category made up 48% of the overall demand in October-December 2020.

“Developers launched attractive offers that effectively lowered overall cost for buyers, prompting more people to invest in property during the festive season in 2020. Low home loan interest rate together with lowering of circle rates by some states also contributed to the improvement in the sales,” PropTiger.com said.

Maharashtra and Karnataka lowered stamp duties on property registration, which provided a much-needed additional impetus to the residential sector in the aftermath of the pandemic. Consequently, Mumbai and Pune contributed more than 50% of the sales during the last quarter of 2020 with a share of 31% and 20%, respectively.

“While the trends point to a market recovery and positive news given the imminent launch of a vaccine that will ease the pandemic concerns, our optimism should be cautious. Buyers continue to expect low home loan rates, extension of developer offers and prefer ready-to-move inventory than those under construction,” said Mani Rangarajan, Group COO, of Housing.com, makaan.com, and PropTiger.com.

The sector is digitising at a rapid pace and more than 90% of potential home buyers have moved online to shortlist properties, he said adding, “We have seen a strong growth in online booking throughout 2020.”

The growth in average prices for newly launched projects across the top cities remained relatively flat, with prices being range-bound. Prices increased in Ahmedabad and Hyderabad by more than 5% y-o-y, which could be attributed to increased demand from end-users for housing in specific locations. Average prices were flat in Delhi NCR and the Mumbai metropolitan region (MMR), the two strongest housing markets in the country.

Unsold housing inventory in top eight cities was at over 7.18 lakh units as of December 2020 compared to nearly 7.92 lakh units in December 2019, declining 9% on a y-o-y comparison.

However, because of a lower sales velocity in 2020 as compared to 2019, the average inventory overhang has increased to 47 months as of December 2020, as compared to 27 months in December 2019. Inventory overhang is defined as the time that builders would take to sell off their existing stock at the current sales velocity.