Sales figures for the third quarter (Q) of the calendar year (2020) from July to September pointed to signs of a recovery in the real-estate sector, though some of this growth could potentially be attributed to pent-up demand due to the prolonged lockdown across the country in the prior quarter due to the pandemic. The numbers also point to the importance of the affordable housing segment in the future growth of the sector.
According to Real Insight Q3 2020, a quarterly analysis of India’s eight prime residential markets by leading online real estate brokerage firm PropTiger.com, residential home sales aggregated to 35,132 units during Q3, an increase of 85% over the previous quarter. Housing units in the sub-Rs 45 lakh price bracket, categorized as the affordable housing segment under income tax laws in India, made the biggest contribution to sales during the quarter, contributing 45% to overall sales numbers. While year-over-year sales comparisons may not be relevant given the current extraordinary circumstances, this pointed to a significant decline of 57% compared to Q3’19.
New supply grew almost 60% on a quarter-over-quarter basis with 43% of the 19,865 units launched coming in through the affordable housing segment. However, on a year-over-year basis, launches showed a significant downward trend declining by 66%.
“Green shoots are visible pointing to the start of a recovery in residential real estate, evidenced by improvement in new launches and sales on a quarter-over-quarter basis. These are unprecedented times, which have made buyers aware of the important role that homes play in ensuring their well-being as well as their physical and emotional security. This, together with the fact that real estate is a hard asset, and the fact that home loan rates are near a 15-year low have encouraged buyers to return to the market. In recent times, the Government and the Reserve Bank have also taken steps to enhance liquidity in the sector and encourage banks to extend home loans at cheaper rates. With several macro-economic indicators showing a positive trend in September, we may well be on the road to a more sustained recovery and the upcoming festival season will be critical in determining the growth trajectory in the sector over the next twelve months” said Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com.
The outlier locales: Areas that drove the demand
Even though the need for social distancing and economic uncertainties continued to weigh down on the recovery process, some high-potential residential belts attracted homebuyers during the quarter, primarily because of their growth prospects, comparative affordability and availability of ready housing stock.
While Thane West in the Mumbai Metropolitan Region (MMR) made the biggest contribution to demand during the September quarter, five localities from the Pune housing market made it to the list of top-10 localities in terms of demand.
Overall, two localities each from the MMR and the National Capital Region (NCR) and one locality from Bengaluru made it to the top-10 list in terms of sales.
The key movers of residential demand in third quarter of 2020
| Rank | Locality | City | Price range (Rs per sqft) |
| 1 | Thane West | Mumbai | 10,200 – 10,400 |
| 2 | Hinjewadi | Pune | 5,500 – 5,600 |
| 3 | Dombivli | Mumbai | 5,900 – 6,100 |
| 4 | Sector 89, Gurugram | Delhi NCR | 3,300 – 3,400 |
| 5 | Varthur | Bengaluru | 5,200 – 5,300 |
| 6 | Sector 79, Gurugram | Delhi NCR | 5,000 – 5,100 |
| 7 | Wagholi | Pune | 4,000 – 4,100 |
| 8 | Bavdhan | Pune | 6,000 – 6,200 |
| 9 | Wakad | Pune | 6,100 – 6,300 |
| 10 | Manjari | Pune | 5,100 – 5,200 |
Source: Real Insight Q3 2020
| Sales | 2020 | % Growth | % Growth |
| City | Qtr 3 | QoQ | YoY |
| Ahmedabad | 3,339 | 183% | -48% |
| Bangalore | 4,825 | 74% | -50% |
| NCR | 4,427 | 135% | -39% |
| Chennai | 2,317 | 77% | -40% |
| Hyderabad | 3,260 | 197% | -57% |
| Kolkata | 2,479 | 88% | -24% |
| Mumbai | 7,378 | 62% | -72% |
| Pune | 7,107 | 45% | -59% |
Source: Real Insight Q3 2020
“Consumers continue to perceive real-estate as the most stable asset and a number of them are looking to upgrade their homes as working from home is likely to continue. The Government has also been supportive by taking steps to make buying more attractive. While states such as Maharashtra have reduced stamp duty rates on property transactions, financial institutions have also brought home loan interest rates to sub-7% level since the RBI brought the repo rate to 4%. On its part, the developer community is not only ensuring buyers are able to book their future homes using virtual tools but also offering festive discounts and easy payment plans. We are optimistic that sales during the festive season will be encouraging and will help drive further recovery in the sector,” says Mani Rangarajan, Group COO, Housing.com, Makaan.com & PropTiger.com.
Inventory declines positively, while overhang increases
After seeing a reduction of 12% year on year, unsold stock in the top eight residential markets was at 7,23,060 units as on September 30, 2020. As developers continued to show restraint in launching new supply because of the ongoing market conditions, unsold stock contracted by 2% in the September quarter when compared to the preceding quarter.
The housing markets in the West region, however, continue to have the highest share in the overall unsold inventory. Put together, Mumbai and Pune contribute 56% to the national unsold stock, followed by NCR and Bengaluru, with 15% and 10%, respectively.
Due to the strain on consumer demand, as a result of the coronavirus-induced economic uncertainty, inventory overhang has increased significantly from the level seen in the same quarter last year. National inventory overhang increased to 43 months as of September 2020, as compared to 28 months in Q3 2019. Inventory overhang is the estimated time period within which developers will be able to sell off the current unsold stock. This projection is made keeping in view the current sales velocity.
| New Launch | 2020 | % Growth | % Growth |
| City | Qtr 3 | QoQ | YoY |
| Ahmedabad | 3142 | 135% | -40% |
| Bangalore | 2086 | -36% | -72% |
| NCR | 940 | -53% | -86% |
| Chennai | 947 | 49% | -45% |
| Hyderabad | 4264 | 108% | 4% |
| Kolkata | 717 | 292% | -43% |
| Mumbai | 3134 | 72% | -79% |
| Pune | 4635 | 271% | -74% |
Source: Real Insight Q3 2020
Price growth muted
While end-user demand and controlled supply in the markets of Ahmedabad and Hyderabad have helped firm prices in these cities, other cities have seen almost negligible – upwards or downwards — movement annually in terms of average pricing during the three-month period ended September 30.
In Ahmedabad and Hyderabad, there has been an annual increase of 6% in prices.
Price card
Weightage average property price in top 8 residential markets
| Price | Wtd Avg Price on qtr end | ||
| City | Sep’20 | Sep’19 | % Change (YoY) |
| Ahmedabad | 3,151 | 2,978 | 6% |
| Bangalore | 5,310 | 5,214 | 2% |
| NCR | 4,232 | 4,264 | -1% |
| Chennai | 5,240 | 5,118 | 2% |
| Hyderabad | 5,593 | 5,252 | 6% |
| Kolkata | 4,158 | 4,101 | 1% |
| Mumbai | 9,465 | 9,412 | 1% |
| Pune | 4,970 | 4,872 | 2% |
Source: Real Insight Q3 2020
The cities included in PropTiger’s analysis include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Delhi NCR (Delhi, Gurugram, Noida, Greater Noida, Ghaziabad, and Faridabad) and Mumbai MMR (Boisar, Dombivli, Mumbai, Mazagaon, Panvel, Thane West), and Pune
