Housing market in India is showing signs of revival with annual sales exceeding the annual launches for the first time since 2016.

The year saw a drop of 14 per cent in unit launches to 1,36,998 units when compared to 1,59,452 units launched in 2018. On the sales front, the year saw an increase of six per cent with 1,43,923 units sold in 2019 compared to 1,36,273 units in 2018, according to a report from property consultants JLL.

Last quarter of the year saw the biggest dip at 26,405 units, a decrease of 31 per cent when compared to Q4 2018, contributed majorly to the decline in new launches.

Mumbai remained the only city in the country that saw a hike in launches. All other cities witnessed a drop in launches in 2019 compared to 2018.

The affordable and mid-income housing segments (ticket size of up to one crore rupees in Mumbai and ₹75 lakh across other cities) still form the majority of the launches and supply. However, the collective share of the two segments has also dropped to 55 per cent in 2019 as compared to 66 per cent in 2018, the report added.

Pune tops the list with 84 per cent of the new supply falling in the affordable and mid-income category.

The drop can be attributed to the fact that there is already an existing substantial number of under-construction units in these segments. Interestingly, larger markets such as Mumbai, Bengaluru and Delhi NCR witnessed more launches in these ticket-sizes as compared to markets like Hyderabad and Kolkata.

On the sales front, the report added, while the first half of 2019 witnessed a substantial jump in sales of 22 per cent on a y-o-y basis, the second half of the year recorded a nine per cent dip in the offtake of units. The prolonged economic slowdown led by weak consumer demand has been manifesting itself in the form of sluggish sales with buyers postponing their purchase decisions.

Other markets

While the three key markets of Mumbai, Bengaluru and Delhi NCR continued to account for a major chunk of the total sales, the number of sold units in Hyderabad increased by 21 per cent y-o-y in 2019. In the last quarter (October to December) of 2019, Mumbai has so far defied market trends and has been the only city to register a sales growth when compared to Q4 2018.

Ramesh Nair, CEO & Country Head – India, JLL, said: “The residential market has seen a gradual shift in consumer behaviour. Homebuyers are now looking at mostly ready-to-move-in apartments or under-construction properties by developers who have good track records pertaining to completion of projects.”

“Recent reforms and developers’ focus on the delivery of projects will lead to more supply in 2020 and the revival of buyers’ sentiments. We believe sales will continue to rise in future and are likely to increase beyond the pre-demonetization year of 2016. The revival signs of the residential segment will be more visible through affordable housing demand which will drive long term institutional funds to invest in this segment,” he added.

The surge in sales will primarily hinge on enhanced consumer confidence, which in turn depends upon the effective implementation of progressive government policies and economic growth registering a comeback.

The report added, with sales surpassing new launches, there has been a decline of two per cent in unsold inventory. Samantak Das, Chief Economist and Head of Research & REIS, JLL India, said, “All cities except for Mumbai and Bengaluru witnessed a decline in inventory levels. An assessment of years to sell (YTS) reveals that the YTS across the seven cities declined from 3.9 years in 2018 to 3.2 years by the end of 2019 which signals a better level of inventory management.”

Note: Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata

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