Low interest rate, government sops boost home sales in Q1: Knight Frank India

The residential market in India has seen a steady rise in both sales and launches in Q1 2021 (January to March) period, international property consultancy Knight Frank said on Monday.

While launches were recorded at 76,006 units, sales were recorded at 71,963 units in the top eight cities of India, it said in its latest report.

Quarterly sales volumes steadily improved since Q2 2020 and have surpassed the 2019 pre-Covid quarterly sales average in Q1 2021.

"Considering that this is the second consecutive quarter to cross the 2019 quarterly sales average, we believe that the market is recovering well, if not having done so already," said Knight Frank India.

A total of 71,963 units were sold during Q1 2021, 44 per cent more than in Q1 2020. This healthy growth in sales also encouraged developers to launch new projects which is reflected in the 76,006 units launched during the quarter, a substantial growth of 38 per cent year-on-year.

Mumbai and Pune led the table in both launches as well as sales. These two markets benefited from significant regulatory impetus in the form of discounts in stamp duty charges that led to significant improvement in sales velocity.

While end users were keen on taking advantage of the reduced stamp duty regime, developers also thought it right to take advantage of the said growth to launch new projects.

In the last few weeks of Q1 2021, Karnataka also doled out stamp duty sops to home buyers for residences costing upto Rs 45 crore. However, the impact of this will be seen in subsequent quarters.

The increasing sales volumes have also arrested the intensity of fall in residential prices of most markets while Hyderabad and the NCR have seen a marginal growth in prices compared to a year ago.

The incidence of developers giving indirect discounts has been a key factor in spurring sales in 2020 but this has been observed to have reduced significantly in Q1 2021.

In fact, on sequential basis (quarter-on-quarter), housing prices have remained stable in most cities and recorded an increase in the case of the southern cities of Chennai and Hyderabad.

Homebuyers were inclined to acquire ready or near-ready inventory to minimise completion risk. This is reflected in the average age of inventory which stayed at 16.7 quarters in Q1 2021 compared to 15.9 quarters in the year ago period.

This is also in line with developers focusing on liquidating older inventory before launching new products which has consistently helped reduce unsold inventory levels to 0.44 million units in Q4 2020, 2 per cent less than a year ago.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, said while the sentiments have remained largely positive in first quarter leading to consistent rise in home sales, the recent spike in Covid-19 cases in the country has to be factored in for future.

"We are yet to understand the complete impact of 'second wave' on economic activities and resulting wealth creation. The extend of impact of second wave of Covid-19 pandemic in India is still unknown, thus the sector will have to tread carefully to maintain the recently acquired momentum."

( With inputs from ANI )