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Home sales in India’s nine major property markets declined by 11% in Q1 of FY20, while new launches fell by 47%, as cash-starved developers waited for the outcome of the Lok Sabha elections before making any new plans, says a report by PropTiger.com

Home sales in India’s nine major property markets declined by 11% year-on-year in the first quarter (April-June) of the current financial year (FY20), according to a report by PropTiger.com. During the same period, new launches also fell by 47%, primarily because cash-starved developers waited for the outcome of the Lok Sabha elections, before making any new plans, the report titled ‘Real Insight‘ indicates. The only relief during the quarter, came in the form of a reduced housing stock, with unsold inventory declining 12% YoY.

The cities included in the analysis were Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.

Launches: Gurugram defies the trend

As against 71,970 units in Q1 of FY19, only 37,852 housing units were launched in Q1 FY20, resulting in a fall of 47%. Barring Gurugram, where new launches more than doubled, from 2,588 units to 5,945 units, new launches fell across cities during this period. “The severe liquidity crunch and harsh market conditions continue to drive realtors to keep their guard on and exercise extreme caution, with respect to new launches, in order to survive in a difficult environment,” said the report.

Sales: Some cities show pick-up

When compared to 80,628 units in Q1 FY19, only 71,957 units were sold in Q1 FY20, a fall of nearly 11%. Home sales, however, increased in some cities, including Gurugram, Hyderabad, Kolkata and Pune. The sharpest increase in sales was seen in the millennium city Gurugram, where 4,951 units were sold in Q1 FY20 as against 3,737 units in Q1 FY19 &ndash an increase of 32%.

Sales may, however, see some improvement in the future.

“A stable government has taken charge at the centre, after the Lok Sabha elections. The new government has announced several measures in the Union Budget 2019-20 that would definitely trigger fresh activity in India’s real estate sector,” said Dhruv Agarwala, group CEO, Housing.com, PropTiger.com, Makaan.com and Fastfox.com. “The Budget has, for instance, offered relief to home buyers, by increasing the tax deduction limit on the home loan interest component to up to Rs 3.50 lakhs on affordable homes. Several banks have also lowered their interest rates, after the RBI reduced its repo rate. As a result of this, sales activity might see a pick-up in the upcoming quarters,” Agarwala added.

Inventory: Falling for the better

On account of an arrest in new launches, housing inventory declined by over 12% in the past one year. Real estate developers had an inventory stock of 7,97,623 units in Q1 FY20 as against 9,09,324 units in Q1 FY19. Inventory stock declined across cities during the quarter, data showed. The inventory overhang also reduced slightly to 30 months &ndash at the current sales velocity, it would take developers less than three years to sell the existing housing stock. The report added that another 5,00,000 fresh units would join the market by March 2020.

Prices: Hyderabad shows significant positive growth

Rates of property in Hyderabad increased by 17% in the past one year, the report shows. In other cities, however, the growth was muted with rates moving upwards between two and three percentage points. Gurugram was the only city that saw some price correction in the past one year, with prices falling by 3%.