Housing sales fall 26%, launches decline 51% in March quarter. This is a huge drop when compared to the figures of previous quarters.
By Varun Singh
Housing sales in India’s prime residential markets declined 26% during the last quarter of FY20 amid the government imposing a lockdown in March in order to contain the effects of the coronavirus pandemic, says a recent report by online property brokerage firm PropTiger.com.
According to the report, a total of 69,235 units were sold during the quarter ending March as against 93,936 units sold during the same quarter last fiscal.
New unit launches during the quarter ending March 31, 2020 fell 51% year-on-year because of the ongoing liquidity issues being faced by real estate developers. During the three-month period between January and March, only 35,668 units were launched across India’s top nine residential markets, which include Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Pune and Noida. In the same quarter last fiscal, a total of 72,932 units were launched across these markets.
On a quarter-on-quarter basis, housing sales fell 11% while launches declined 27% in Q4 FY20, the report shows.
Real estate in January-March quarter
Source: Real Insight Q4FY20
“While the Chinese economy has been reeling under the impact of the coronavirus contagion since December 2019, the situation started to get worrisome in India only in March. Following the spike in number of infections, the government first announced a 21-lockdown on March 24, and then appropriately extended it till May 3, keeping in mind the severity of the situation. The lockdown, which has virtually brought to a standstill most economic activity in the country, has hurt all sectors, including real estate. The adverse impact of the corona virus is visible on housing sales in the last quarter of the last fiscal because March is usually one of the biggest month for sales,” says Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com.
During the three-month period, the lowest number of sales was recorded in March because of the lockdown, shows the report.
Housing sales monthly break-up
Source: Real Insight: Q4Fy20
Sales decline the most in Gurugram
While housing sales fell across cities during the quarter, they declined the most in Millennium City, Gurugram, falling 73% y-o-y. Sales also fell significantly in Kolkata (41%), Hyderabad (39%) and Ahmedabad (36%).
Inventory Fall 15%
Some relief to the sector, however, came in the form of reduced unsold stock, which declined 15% year-on year. Real estate developers in India’s top nine residential markets have an unsold stock totalling 738,898 units as on March 31, 2020. On a Q-o-Q basis, inventory stock fell 6%.
No improvement, however, was seen in inventory overhang, which stood at 27 months, exactly the same as the past three quarters. However, when compared to Q4FY19, inventory overhang declined by two months.
Inventory overhang is the time in months builders are expected to take to sell off existing stock, factoring in the current sales velocity.
Barring Gurugram, where prices fell 1% when compared to the March quarter last year, property values have shown an upwards movement in other cities, even if only marginal.
At 9%, the highest annual appreciation in prices was seen in Hyderabad, followed by a 6% increase in Ahmedabad. Prices showed no change in Chennai. In other cities, the increase was between 1-4% on an annual basis.