After a moderate sales growth in the first quarter of 2024, infotech hubs of Pune, Hyderabad and Bengaluru are seeing decline or even flat growth in residential property sales during the current quarter.
While Hyderabad and Pune have seen the highest decline among the top cities at 20% and 15%, respectively, sales remained flat in Bengaluru, according to data by PropEquity. In the January-March quarter, Bengaluru, Hyderabad and Pune saw growth of 6%, 18% and 1%, respectively.
Samir Jasuja, CEO & MD, PropEquity, attributed the fall to election, huge amount of launches in previous quarters and a sluggish Q2.
Some experts believe that there could be other factors at play too.
“Preliminary findings point towards housing sales softening in these cities in the ongoing quarter. Issues in the IT/ITeS sector is one factor, another significant one is the escalating prices – particularly in Hyderabad and Bengaluru,” said Prashant Thakur, regional director and head of research, at Anarock Property Consultants.
Average residential prices in both these cities rose significantly in the last one year. Given that buyer demand has traditionally been skewed towards mid-segment properties – between Rs 40 lakh and Rs 80 lakh – in these cities, the increased prices are denting overall sales to some extent, Thakur said.
According to a real estate-focused PE firm’s CEO, prices have doubled in Bengaluru and Hyderabad in last four years. “Exuberance is moderating across the board in all cities. But it has moderated more in Bengaluru and Hyderabad due to a drastic price rise,” the CEO said, adding that the cities that have seen a meteoric rise will see a steep fall too.
Amit Goenka, managing director and CEO at Nisus Finance, a Mumbai-based real estate fund manager, said enquiries in Hyderabad have dropped by 17-18% and by 15-16% in Bengaluru.
“Job creations have not been happening in the IT sector like before. Number of startups have come down,” Goenka said.
Sunil Pareek, executive director at Assetz Property Group, said the positive aspect is that there is growth even at the higher base of the annual market size.
“Markets like Bengaluru and Pune have increased their annual sales size by more than 50% to 60,000-90,000 units a year market. You can’t expect the 50% growth in annual market size to grow forever. Important point is that the higher numbers have sustained comfortably,” Pareek said.
Experts say there are chances of a decline in sales in other cities too.
“It does seem that we may see around 5-8% quarterly decline in housing sales across the top 7 cities in Q2 of 2024. However, on a yearly basis, housing sales would remain more or less the same,” Anarock’s Thakur said, adding that while speaking of sales tapering off, one must also consider that it against a very high base set in Q1 of 2024 – when sales were at an all-time high.
Quarterly housing sales were at decadal high with nearly 130,170 units sold in Q1 of 2024 across the top 7 cities, Anarock said. This is a 14% y-o-y rise against nearly 113,775 units sold in Q1 of 2023.