Indian homebuyers made the highest number of residential purchases in 15 years during the first quarter of 2023, even as the Reserve Bank of India is raising interest rates consecutively to tackle inflation.
While sales of residential units during Q1CY23 soared 20% on a year-on-year basis and about 15%, sequentially, to over 62,000 units across markets, new launches jumped 24% YoY and 19% QoQ, to nearly 75,000 units, noted a report by residential property consulting firm JLL.
On the supply side, the last peak in launches was achieved in 2012, with nearly 83,000 units.
Catalysts to growth during this quarter included progressive government policies, infrastructure growth, and robust launches, as per the report.
Even as mid-income housing continued to make for the largest chunk of the sales, premium houses, or those priced over Rs 1.5 crore, saw a significant jump in demand. The segment made up for about 22% of the total unit sales, up from its 18% share in Q1 2022 as more buyers are now seeking bigger homes with good amenities and support infrastructure.
While Delhi and Mumbai Metropolitan Region (MMR) saw the maximum premium segment sales, Bengaluru, Pune and MMR led the sales at an overall level during the quarter.
The quarter also saw a decline in the share of affordable segment houses - those priced below Rs 50 lakh - as their share reduced to 18%, from 22% in the same period last year.
However, JLL expects the rising interest rates, and global headwinds to job security to have some impact on housing sales in the short term.
“Encouraged by robust sales and strong economic fundamentals, developers launched residential projects across the top seven cities of India,” the report noted.
The maximum number of launches were seen in Mumbai and Pune, which together made up about 44% of the total new launches in the quarter.
As developers are seeing an increasing demand for premium segment housing, the share of this segment also increased in the total number of launches, as per the report, comprising about 27%, or nearly a third of the total units launched in the period.
The report, however, said that developers are now focusing on emerging micro markets and suburbs, supported by the development of physical and social infrastructure, increased inhabitation, and the availability of land banks.
The number of unsold units also increased by about 3% sequentially, with Mumbai, Bengaluru and Hyderabad seeing the maximum unsold stock. However, it noted that the expected time to liquidate unsold stock declined to 2.7 years, versus 2.9 years in Q4 2022.
As for affordability, there have been increasing challenges due to the current interest rate regime.
“With the increase in the repo and home loan interest rates along with a rise in residential prices across the top seven cities of India in the range of 4-12%y-o-y, the cost of acquisition for home buyers has increased,” it said.