COVID-19 Effect - Housing Sales, New Launches Dip 42% Each in Q1 2020
The Government has taken an inarguably necessary hard-line stance to curtail the spread of the virus. The lockdowns have stalled construction activity and will lead to project delays in the future, but this is a reality the sector must accept and live with.
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As anticipated,theCovid-19 pandemic had considerable impact on the Indian housing sector. Residential sales saw a42% y-o-y dropin the first quarter of 2020, reveals the latest data by ANAROCK. In Q1 2020, residential sales in the top 7 cities stood at 45,200 units, against 78,510 units a year ago. On q-o-q basis, housing sales fell by 24%.
Meanwhile,new launches too fell by 42%annually - from 70,480 units in Q1 2019 to approx. 41,200 in Q1 2020. Q-o-q supply also declined by approx. 21%. Yearly trends indicate that MMR and Pune recorded the maximum y-o-y drop of housing supply - by 61% and 56% respectively - while Chennai and Kolkata actually displayed positive trends with nearly 16% and 8% yearly rise.
Anuj Puri, Chairman – ANAROCK Property Consultantssays, “Given the ongoing global healthcare calamity, it’s no surprise that housing sales and new project launches across India’s top 7 cities decreased both on yearly and quarterly basis. As expected, monthly data trends reveal that March – the month when most advisories and lockdown were imposed - saw a steep decline in both new launches and housing sales against the preceding two months.”
“The Government has taken an inarguably necessary hard-line stance to curtail the spread of the virus. The lockdowns have stalled construction activity and will lead to project delays in the future, but this is a reality the sector must accept and live with.”
Perhaps the only silver lining is that developers were able to shed nearly 3% of their unsold inventory in a year – from 6.65 lakh units in Q1 2019 to over 6.44 lakh units in Q1 2020. On a quarterly basis, the decline was just 1%.
New Launch Overview - Q1 2020
The top 7 cities saw around 41,200 new units launched in Q1 2020, as opposed to 70,480 units in the corresponding period of 2019 and 51,850 units in Q4 2019.
The key cities contributing to new unit launches in Q1 2020 included MMR (Mumbai Metropolitan Region), Bengaluru, Pune, and NCR - together accounting for 80% of unit additions.
- MMRsaw the launch of approx.10,480units – adecline of nearly 25%from Q4 2019. Over 69% of the new supply was in the sub INR 80 lakhs budget segment. Last year in Q1 2019, new launches stood at 26,850 units – a yearly decline of 61%.
- Bengaluruadded approx.8,600units in Q1 2020 - a quarterly decrease of 18%. Over 87% of new supply was in the sub INR 80 lakh price bracket. The city’s yearly decline stood at 5%.
- Puneadded approx.7,790new units in Q1 2020, compared to 9,550 units in Q4 2019 - adrop of 19%.The new supply a year ago was approx. 17,520 units – a decline of 56% y-o-y.
- NCRadded approx.6,190new units in Q1 2020, a quarterlydecrease of 22%.Approx. 64% of the new supply in this quarter was in the affordable segment. Last year, the new supply was 8,030 units in the same period.
- Hyderabadsaw new launchesdrop by 11%over the previous quarter, with approx.3,380units launched in Q1 2020. The yearlydecline was 30%.
- Chennaiadded approx.3,680units in Q1 2020, a quarterlyincrease of 8%over the previous quarter. Interestingly, onyearly basis, it saw a rise of 16%.
- Kolkataadded only approx.1,100units in Q1 2020 - a significantdecrease of 59%over Q4 2019. Approx. 52% of new supply was in the affordable segment. However, on yearly basis, new launchesincreased by 8%.
Housing Sales Overview - Q1 2020
Around45,200units were sold in Q1 2020 – a significantdecline of 42% y-o-y, and of24% over the preceding quarterdue to the COVID-19 pandemic. NCR, MMR, Bengaluru and Pune together accounted for 84% of the sales in the first quarter of the year.
- Kolkatarecorded a significant drop in sales in this quarter as compared to the other top cities. City salesdecreased by 25%- from 3,260 units in Q4 2019 to 2,440 units in Q1 2020 - a significant drop of 39% in a year.
- MMRandNCRalso recorded a significant decrease in sales in this quarter vis-à-vis the other top cities. Sales in both regionsdecreased by 24%each over the previous quarter, clocking in at approx. 8,150 and 13,910 units respectively. As compared to previous year,housing sales in MMR reduced by 42%and by41% in NCR.
- Sales inBengaluru,PuneandHyderabaddecreased by 23%each over the previous quarter, with approx. 8,630 units, 7,200 units, and 2,680 units respectively. On yearly basis, thedeclinein the three major IT hubs stood at45%, 42%and50% respectively.
- Chennaisaw sales of approx. 2,190 units - adecline of 21%over Q4 2019, and by36% annually(since Q1 2019).
Unsold Inventory till Q1 2020
With new supply and housing sales remaining subdued in the quarter,unsold inventory saw a marginal decline of 1%on a quarterly basis - from 6.48 lakh units in Q4 2019 to 6.44 lakh units by Q1 2020, and3% y-o-y- from 6.65 lakh units in Q1 2019 to 6.44 lakh units by Q1 2020.
Bengaluru and Kolkata witnessed the highest yearly reductionin unsold inventory with 6%each from Q1 2019 to Q1 2020. However, unsold inventoryincreased by 10% in Chennaiin the same period.