Despite multiple headwinds, including high inflation and increasing interest rates, residential activity in Q2 2022 remained quite upbeat across the top 7 cities. To put it in numbers, approximately 84,930 units were sold in Q2 2022 across the top 7 cities while new launches stood at 82,150 units. This is the best performing Q2 since 2015, indicating robust demand and resilience of the sector, according to ANAROCK.
Interestingly, the unsold inventory in top 7 cities witnessed a 4% yearly decline, indicating an increasing equilibrium between demand and supply. “The pandemic has created an unrelenting appetite for homeownership. Also, the present state of the volatile stock markets has further strengthened the belief that a physical asset is far safer to invest now. Most importantly, the affordability of homes in the top cities continues to be all-time best,” says Anuj Puri, Chairman, ANAROCK Group.
Mid segment (Rs 40 lakh – Rs 80 lakh) remained the most preferred segment accounting for 33% of new launches, followed by premium segment (Rs 80 lakh – Rs 1.5 cr) that accounted for 29% of the new supply. Units priced at Rs 40 lakh and below contributed 20% of the launches while the remaining 18% was contributed by the luxury and ultraluxury segment combined.
A deep-dive into data further indicates that MMR and Pune led the housing activity (both housing sales and new launches) in the quarter among all the top 7 cities. Cashing in on the growing demand by homebuyers, both cities saw new launches of 46,290 units in Q2 2022, comprising 56% share of the total new launches across the top 7 cities. As for the housing sales, MMR and Pune together recorded housing sales of 38,280 units in Q2 2022, accounting for 45% share of the overall sales in top cities.
Interestingly, NCR was second only to MMR in the quarter with nearly 15,340 units sold there. Notably, developers in NCR restricted new supply in the region which eventually helped the unsold inventory to witness 16% yearly decline.
Average property prices in the top 7 cities collectively witnessed a 6% rise on yearly basis. The price rise was mostly due to the increase in construction cost due to high material costs that the developers passed on to the buyers partially.
“Overall, residential demand continues to hold strong, and the market continues to be driven by grade A developers who have a strong launch pipeline for the remaining part of the year. The market continues to be favourable for homebuyers as the overall affordability remains attractive despite two consecutive rate hikes by RBI. The sector finally seems to be gaining its momentum, but the trajectory of inflation and RBI’s response towards tackling it needs to be closely watched,” observed Puri.
Residential market to remain buoyant
Considering the residential activity seen since the pandemic and the present scenario, ANAROCK anticipates housing demand to remain buoyant in the coming quarters. “The fact is that there continues to be a housing shortage in the country – MoHUA has projected a housing shortage of 30 million units by 2022,” it says.
A host of other factors such as the continued all-time best affordability of homes, lucrative home loan rates despite a slight rise, controlled launches, higher prominence of organized players, and the momentum of Indian economy, also point that the residential sector will emerge stronger in the times to come.