Amid the receding impact of Omicron and a significant decline in caseload, housing sales across the top eight metro cities witnessed around 8-10% growth QoQ in the first quarter of 2022, according to 99acres Insite report, titled ‘India Residential Market Update January-March 2022’.
As per the report, new supply in the quarter increased approximately by 24% QoQ. Over 550 projects were added during the period, including new launches as well as under-construction housing societies. Despite improved fresh supply, the inventory overhang in the quarter ended March 2022 slipped to around 5% to 6.5 lakh units. The average property prices increased marginally by a percent in the studied period.
However, amid the average construction costs rising by around 12% due to oil price hike, realtors in Mumbai and Delhi NCR threatened to stall construction or increase the home values in case of no respite. The rental market witnessed some transactions after many quarters in the backdrop of offices reopening and espousing hybrid model.
Speaking on the report, Maneesh Upadhyaya, Chief Business Officer, 99acres.com, said, “Residential markets across the top eight cities together contributed to a 4-year high in the sales volume in Jan-Mar 2022. Homebuyers were seen visiting sites and closing deals in new homes and resale markets despite initial lockdowns due to the rising virus load in January 2022. Nevertheless, increasing raw material costs due to the Ukraine-Russia conflict kept the builder fraternity worried. Developer bodies in Maharashtra and Delhi threatened to halt construction activities in the absence of government intervention.”
With finance industry giants like the State Bank of India (SBI) and HDFC surpassing the pre-COVID levels of home loan sanctions as on January and March in FY 2022, the homeownership appetite in the market was high. The sentiment remained strong as the Reserve Bank of India (RBI) continued to maintain a neutral stance on the repo rate and reverse repo rate at 4 percent and 3.5 percent, respectively, for the 10th consecutive time in February 2022.
Ready-to-move units or projects nearing completion continued to capture the maximum demand share amid zero GST and timely possession barring cities like Ahmedabad, where home buyers’ inclination was majorly lop-sided towards under-construction units. While 2 BHK units observed maximum offtake, demand for 3 BHK units also gained a steep hike. Multi-decadal low-interest rates and affordability ratios in prominent cities like Mumbai, Pune, Ahmedabad and Chennai, standing at 20-25 percent currently against 53 percent a decade ago, corroborated the market sentiment.
New housing society launches increased by approximately 60 percent YoY. Surprisingly, Chennai recorded multifold growth in yearly launches. Approximately 77 projects were registered with TN RERA in Jan-Mar 2021, against 16 projects listed a year back. Delhi NCR and Bangalore saw the maximum decline in new supply YoY of around 80 percent and 40 percent, respectively.
Rental sentiment improved across metros in Jan-Mar 2022. Resumption in offices helped buoy rental demand. Unlike the last year, when the landlord community struggled to find tenants, Jan-Mar 2022 saw transactions improving. This, however, could not translate into any hike in average rentals, YoY.