The gradual revival in home buyers’ confidence and improved affordability has aided residential property sales across top seven property markets of India continue its resurgence witnessed in 2018 through the first half of 2019.
With Hyderabad being on top among the seven cities, residential real estate market witnessed an increase of 22% in sales at a pan-India level at 78,247 apartments during the period, showed data from JLL India. However, it still remains below 80,171 apartments sold during the first half of 2016.
During the first half of 2019, Hyderabad recorded the highest growth in sales at 65%, followed by Delhi NCR at 42% on a year-on-year basis.
Affordable housing and mid-income segment continued to dominate the sales as the share of these remain over 50% across these top cities. This was attributed to the government’s move, during the first quarter of 2019, to further reduce GST rates on affordable homes to 1% from the earlier 8%, without input tax credit (ITC). The GST on projects under construction, which are not under the affordable housing segment, was reduced to 5% from 12%.
Sales are likely to receive a further fillip with progressive policies of the government. During the first quarter this year, the government further lowered GST rates on affordable homes to 1% from the earlier 8%, without input tax credit (ITC). The GST on projects under construction, which are not under the affordable housing segment, was reduced to 5% from 12%. The rate revision augurs well for homebuyers as the process of claiming the ITC under the former system was complex.
“Series of reforms and rising buyers’ interest in the segment have propelled the sector to align itself to the market demand. Interestingly, in most cities, homebuyers continue to focus on ready to move in projects and projects nearing completion. As a result of this shift in buying preference, developers too are focused on completing their ongoing projects,” said Ramesh Nair, CEO & Country Head, JLL India.
With developers focusing on delivery of already launched projects, new launches of residential units decreased by 11% on a year-on-year basis across the top seven cities, the report added. With the exception of Mumbai and Bengaluru, where launches grew from a year ago, all other cities saw a dip during the first half of 2019. Mumbai, Delhi NCR and Bengaluru continued to dominate launches and formed three-fourth of the overall launches during this period.
“Limited number of launches by developers, in a way, is helping the sector to balance the demand supply scenario in the country. This will act as a cushion and help the sector revive. As a result of the reform measures more specifically RERA and GST, we expect more transparency in the sector which in turn will bring back buyers’ confidence,” said Siva Krishnan, MD – Residential Services, Developer Solutions and Strategic Consulting.
A substantial decline in launches combined with a strong growth in sales in the first half of 2019 has brought parity between year-to-sell (YTS) and average construction period across cities. Most developers across property markets are focusing on execution, delivery and reducing their inventory levels.
“With Delhi NCR and Kolkata being the exception, the average YTS at 3.4 years across the 7 cities compares favourably with the average construction period for a typical residential project across these cities at 3-4 years,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL India.