Second Covid wave likely to hit momentum of housing sales

By: |
April 06, 2021 2:15 AM

As the housing sales momentum across top eight markets in India improved for the second consecutive quarter in a row, Knight Frank on Monday said the increasing sales volume was able to check the intensity of decline in prices during the recently concluded January-March 2021 quarter.

housing salesFor Mumbai, the percentage of decline in prices at the end of 2020 and at the end of January-March 2020 remained flat at 3%.

As the housing sales momentum across top eight markets in India improved for the second consecutive quarter in a row, Knight Frank on Monday said the increasing sales volume was able to check the intensity of decline in prices during the recently concluded January-March 2021 quarter.

However, the real estate consultancy expressed concern over the sales momentum in the April-June 2021 quarter as India faces a strong second wave of Covid infections and the discount on stamp duty in Maharashtra is over.

Knight Frank India chairman & MD Shishir Baijal said: “While sentiments have remained largely positive in the first quarter, leading to consistent rise in home sales, the recent spike in Covid cases has to be factored in for the future. We are yet to understand the complete impact of the second wave on economic activities and resulting wealth creation.

Mumbai and Pune collectively accounted for 52% of the total sales of close to 72,000 units sold across the top 8 cities in Q1 2021.

“Increasing sales volumes have also arrested the intensity of the y-o-y fall in residential prices of most markets, while Hyderabad and Delhi NCR have seen a marginal growth in prices compared with a year ago,” Knight Frank India said in a report.

The incidence of developers giving indirect discounts/freebies 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 a sequential basis housing prices remained stable in most cities and recorded an increase in the case of Chennai and Hyderabad, it added.

For instance, property sales in Delhi-NCR rose 24% y-o-y in Q1 2021 to 6,731 units, which helped the region check the intensity of price decline as at the end of 2020 prices had fallen by 4% y-o-y. This is against prices appreciating, albeit marginally by 1% y-o-y, during Q1 2021.

Similarly, in the case of Chennai, prices were down on an annual basis by 9% at the end of 2020, but with the city reporting a 36% y-o-y growth in apartment sales during January-March 2021, the intensity of price decline softened with rates down by just 2% Y-o-Y at the end of the quarter.

For Mumbai, the percentage of decline in prices at the end of 2020 and at the end of January-March 2020 remained flat at 3%. While in the case of Pune, the city managed to check the percentage of decline in prices from 5% y-o-y at the end of 2020 to 3% y-o-y during Q1 2021.

Overall, developers sold 71,963 units in Q1 2021, 44% 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 growth of 38% y-o-y.

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