- Housing absorption in top 7 cities at approx. 68,600 units in Q2 2019 against 78,520 units in Q1; for first time since 2016, total unit launches are more than units sold in the quarter
- Unsold inventory maintains status quo at 6.65 lakh units
- Hyderabad records highest quarterly drop in housing absorption at 18%; NCR sees least decline at 8%
- Builders restrict new supply in Hyderabad, Pune & MMR; NCR, Bangalore, Chennai & Kolkata see new launches increase by 69%, 21%, 23% & 164% respectively
- Affordable (
- Union budget tax sops for affordable segment to benefit 25,580 new homes across top cities, insufficient in light of relentless demand across metros
- New launches in luxury category (priced INR 2 Cr - 5 Cr) increase by 60% in Q2 2019 against previous quarter
- On yearly basis, home sales in top 7 cities rises by 12% while new launches by 36%
MUMBAI, July 9, 2019 /PRNewswire/ -- As anticipated, residential real estate activity remained largely tepid during the second quarter of 2019 against the backdrop of the general elections during the period but the recent Union Budget sops for the affordable sector may give the much-needed push to the segment henceforth. ANAROCK research indicates that housing sales in Q2 2019 fell by 13% q-o-q and stood at 68,600 units across the top 7 cities.
New launches saw a 2% quarterly decline and stood at 69,000 units. Four of the top 7 cities - NCR, Bangalore, Chennai and Kolkata - saw increased new launches.
Though by a minuscule margin, it was the first time since 2016 that new launch numbers outstripped housing sales in a given quarter. Ideally, it should be vice versa.
- Hyderabad, Bangalore and Pune saw the maximum drop in the housing sales at 18%, 16% and 15% respectively.
- MMR and NCR saw 11% and 8% dip respectively.
Budget Sops to Push Supply in Affordable Segment
Affordable housing saw a quarterly decline of total new supply - by a significant 20% - from 32,060 units in Q1 2019 to 25,580 units in Q2 2019.
Despite high demand for budget homes in the major cities, builders find it challenging to build housing in the incentivized INR 45 lakh budget range. The hope that the government would revise the price definition of affordable housing in the top cities has remained unfulfilled. For a city like MMR, a budget of INR 45 lakh is far too low.
Anuj Puri, Chairman, ANAROCK Property Consultants, says, "Housing sales and new launches usually reduce before and during the general elections period. However, on a yearly basis, housing sales jumped up by 12% in Q2 2019 over Q2 2018, while new launches increased by 36% during the same period. Going forward, with a stable government in power, residential activity is likely to pick momentum in the coming quarters. Though new launches saw a 2% quarterly decline in Q2 2019, and affordable housing supply fell by 20% against the previous quarter, the luxury category (priced INR 2 Cr - INR 5 Cr) saw supply increase by a whopping 60%, led by Hyderabad and NCR."
The government's Budget 'bonanza' for affordable housing - an additional INR 1.5 lakh income tax deduction on interest paid on home loans availed till March 2020 - will incite builders to increase their supply in this category so as to attract first-time home buyers. Thus, we may see an increase in supply in this category in the coming quarters.
Paradoxically, however, the prevailing high property prices within the municipal limits of the major cities prevent builders from launching affordable housing projects there, while lack of basic infrastructure facilities in the peripheral areas - where housing within INR 45 lakh could be developed - discourage buyers.
Q2 2019 New Launch Overview
The top 7 cities recorded new unit launches of around 69,000 units in Q2 2019 as opposed to 70,480 units in Q1 2019. Key cities contributing to Q2 2019 new unit launches were NCR, MMR, Bangalore and Pune, together accounting for 85% of this quarter's addition.
- MMR saw the launch of approx. 23,045 units - a decline of nearly 14% from Q1 2019. Over 63% new supply was added in sub INR 80 lakh budget segment.
- Bangalore added approx. 11,010 units in Q2 2019, a quarterly increase of 22% over Q1 2019. Approx. 28% new supply was added in the affordable segment.
- NCR added new supply of 13,570 units in Q2 2019 compared to 8,030 units in Q1 2019 - a massive rise of 69%. Approx. 48% new supply was added in the affordable segment.
- Pune added 10,700 units in Q2 2019, a 39% decline over previous quarter. More than 85% new supply was added in sub INR 80 lakh budget segment out of which 40% comprised of affordable projects.
- Hyderabad added 4,155 units in Q2 2019, a decrease of 14% over the preceding quarter. Approx. 71% new supply was added in luxury and ultra-luxury segments priced above INR 80 lakhs.
- Chennai added approx. 3,885 units in Q2 2019, an increase of 23% over the previous quarter. Approx. 35% new supply was added in the affordable segment.
- Kolkata added approx. 2,640 units in Q2 2019, a significant increase of 164% over Q1 2019. Approx. 38% new supply was added in the affordable segment.
New Supply: Q2 2019 vs Q1 2019
% Change (Q1-2019 Vs Q2-2019)
Q2 2019 Overall Sales Overview
Around 68,600 units were sold in Q2 2019 - a decline of 13% over Q1 2019. NCR, MMR, Bangalore and Pune together accounted for 84% of the sales in the quarter.
- MMR saw housing absorption decline by 11% in Q2 2019 over previous quarter. City absorption declined from 24,005 units in Q1 2019 to 21,360 units in Q2 2019.
- NCR saw the least decline in housing absorption among top 7 cities by 8% - from 13,740 units in Q1 2019 to 12,640 units in Q2 2019.
- Pune housing absorption declined by 15% in the quarter - from 12,340 units in Q1 2019 to 10,490 units in Q2 2019.
- Bangalore housing absorption declined by 16% - from 15,580 units in Q1 2019 to 13,150 units in Q2 2019.
- Kolkata housing absorption declined by 12% over the previous quarter of Q1 2019 and was recorded at 3,540 units in Q2 2019.
- Hyderabad housing absorption saw maximum decline of 18% in Q2 2019 over the previous quarter and was recorded at 4,430 units in this quarter.
- Chennai housing absorption declined by 13% over the previous quarter with approx. 2,990 units being sold.
Housing Absorption: Q2 2019 vs Q1 2019
% Change (Q1-2019 Vs Q2-2019)
Overall Unsold Inventory (Q2 2019 End)
Housing sales remained subdued due to the general elections; many homebuyers went into wait-and-watch mode. Unsold housing stock remained more or less the same during Q2 2019 as against Q1 2019 at 6.65 lakh units.
Bangalore saw a decline in its unsold stock at 3%, followed by Kolkata with 2%. NCR and MMR saw unsold housing increase by 1% each during Q2 2019 over the preceding one.
%Change (Q1-2019 Vs
Average property prices across the top 7 cities remained the same in Q2 2019 when compared to the previous quarter. On a yearly basis too, average property prices largely remained at status quo.
City-Level Price Trend (INR/sq. ft.)
%Change (Q2-2018 Vs Q2-2019)
%Change (Q1-2019 Vs Q2-2019)
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ANAROCK Property Consultants