Covid-19 Impact: Housing sales, new launches drop to a new low in Q2 2020

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Updated: Jun 29, 2020 7:11 PM

Apart from new launches and sales, unsold inventory also registered a marginal decline of 2% in H1 2020 compared to H2 2019. Sales continued to exceed new launches, resulting in unsold inventory reduction.

real estate, Covid-19 Impact, Housing sales, new launches, Q2 2020, top 7 cities of India, unsold inventory The affordable housing segment continued to be one of the largest contributors to new launches, although its share declined from 41% in H2 2019 to 36% in H1 2020.

The nationwide lockdown imposed owing to the COVID-19 outbreak has impacted business and industry alike in Q2 2020, including real estate. In the residential segment, the impact has been witnessed both on new launches and sales.

According to Anarock, housing sales and new launches have plunged to a new low across India’s top 7 cities in Q2 2020. In H1 2020, for instance, new launch supply in the top 7 cities of India declined by 56% compared to H2 2019. The nationwide lockdown imposed from the last week of March severely impacted the real estate sector, resulting in muted launches. The Q2 2020 was the most impacted quarter with launches being the lowest since 2013. During this quarter, new launch supply declined by 97% over Q1 2020 and 98% over the same period last year.

The affordable housing segment continued to be one of the largest contributors to new launches, although its share declined from 41% in H2 2019 to 36% in H1 2020. In absolute terms, the half-yearly decline in this segment was around 61%. No new supply was added in the affordable segment in Q2 2020.

So far as sales are concerned, despite the prevailing unprecedented crisis created by the COVID-19 pandemic, 57,940 units were sold, and sales continued to exceed launches in H1 2020. Sales decreased by 49% in H1 2020 compared to H2 2019 as every city underwent contraction. The contraction was in the range of 46% to 51% across the top 7 cities of India. Sales in Q2 2020 accounted only for 22% of H1 2020, which primarily led to an overall decline in half-yearly sales. Q2 2020 units sales were 72% lower than the previous quarter and nearly 81% down from Q2 2019.

Apart from new launches and sales, unsold inventory also registered a marginal decline of 2% in H1 2020 compared to H2 2019. Sales continued to exceed new launches, resulting in unsold inventory reduction.

According to Anarock, it has been a watershed year till now where all economic activities are at their lowest levels and are facing challenges to restart. As economic activities halted, the real estate sector witnessed a disturbance in the raw material supply chain which led to limited availability and rising input cost. Availability of labour was another challenge which severely impacted the construction activities at the project sites across the country.

Fear of economic slowdown and probability of job losses led to a weakening of consumer sentiments. Also, the homebuyers were apprehensive about the future of real estate projects considering the imminent delays which played on their minds and reflected in their purchase decisions.

“While the impact on the residential segment has been high, we believe that the demand is likely to resurface during the second half of the year. The festive season falling in the last quarter of the calendar year is likely to kick-off the revival cycle. It is anticipated that the vaccine against COVID-19 will be available by then or the masses will have developed immunity to combat the threat posed to their health and so the situation may start to improve,” says Anuj Puri, Chairman, ANAROCK Property Consultants.

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