India's property market seems to be showing signs of improvement with sales in the top eight cities growing 17 per cent year-on-year in the July-September quarter on the back of positive macroeconomic factors, according to real estate research firm Liases Foras.
Sales in the second quarter of the current financial year rose to 67.9 million sq ft from 57.8 million sq ft a year earlier. However, sales volume slipped marginally compared with the three months ended June 30.
Sales volume was led by the Delhi-National Capital Region (16.9 million sq ft) and Bangalore (13.7 million sq ft). While the Silicon Valley of India has shown resilience over the quarters, the surprise element was the performance of the NCR market, which includes Delhi and its satellite towns such as Gurgaon, Noida, Greater Noida and Ghaziabad.
Indeed, as first reported by VCCircle, the Delhi-NCR market has shown early signs of improvement on the back of the festive fervour after seeing sales fall over the past few quarters. However, opinion is divided on whether the momentum will sustain.
Liases Foras said discounts and freebies by developers at the onset of the festive season led to an increase in inquiries and higher conversion rates, which helped improve the sector's performance.
“A decline in commodity prices has favoured the developers by bringing down their cost of construction. This, in turn, arrested any unwarranted rise in price levels and kept the end users' interest intact,” it said.
The report added that developments at the macro level seem promising and the year will likely end on a positive note for the residential sector.
Even though sales in the NCR have improved after a long gap, the region still has the highest inventory among the top markets. It saw unsold stock go up by 8 per cent on an yearly basis to 345.8 million sq ft.
The Mumbai Metropolitan Region (MMR), the top realty market by value of transactions, also remained heavily laden with inventory standing at 217.2 million sq ft as of September 30.
At the national level, unsold stock rose 18 per cent from a year earlier and 6 per cent from the previous quarter to 1075.7 million sq ft as of September 30. All eight cities saw the unsold stock rise with Pune and Bangalore showing an increase of 28 and 27 per cent, respectively.
Inventory expressed by the number of months it would take for absorption rose to 47 months for the top markets, up 7 per cent. A healthy market would have inventory for eight to 12 months.
Across markets, weighted average prices remained more or less stagnant with a mere 1 per cent appreciation on yearly and quarterly basis. Ahmedabad saw the highest rise in prices at 3 per cent annually while prices dropped by 4 per cent in Delhi-NCR.