Property sales up 21% in eight cities, cheaper home loans help

However, on year-on-year basis sales figure was lower 5%

Home sales, which slumped in the wake of the cash ban, have since shown signs of a recovery, according to Liases Foras, an Indian real estate advisory firm. 

Sales across eight cities rose 21% in the January-March period on a quarterly basis.

The growth was led by Kolkata (47%), Hyderabad (43%) and Ahmedabad (30%). NCR (National Capital Region) contributed to the highest number of sales (14,983 units or 24.5% of total sales across 8 tier-I cites), followed by MMR (Mumbai Metropolitan Region) at 14,505 units or 23.6%.

Sales performance in major cities of India

However, on year-on-year basis, the sales figure was lower 5% due to poor performance of Bengaluru and Chennai, said the report. 

Data from PropEquity too shows that during the January-March 2017 period, the inventory of unsold homes came down by 3.12 per cent but this can be attributed to fewer launches too. 

On a quarterly basis, the affordable housing segment witnessed maximum growth of 31% (these are properties priced below Rs 25 lakh) while the ultra-luxury segment witnessed a 4% decline in sales.

Within the affordable segment, maximum sales were reported in MMR (25%), followed by Pune (19%).

In Pune, Hyderabad, Kolkata, and NCR, prices declined marginally by 1%, while negligible change in price  was noted in all other cities.

Collectively, 71% of new launches fell either in the price bracket of Rs. 25 Lacs – 50 Lacs or Rs. 50 Lacs –1 Cr. In the affordable segment (below Rs 25 Lacs), close to 34% of the new launches were in NCR, followed by 18% in MMR.  

"Developers will probably resist cutting prices but will continue to offer discounts and schemes, or subsidised payment plans. Prospective buyers should feel encouraged by realistic prices in both the primary and secondary markets, lower interest rates & incentives in the form of tax cuts and subsidies," said Pankaj Kapoor, MD of Liases Foras.

Earlier this month, HDFC's Keki Mistry also suggested that given the low interest rates and the time correction of prices that has happened, it is a good time to buy a house, reported The Economic Times.

In November and December property sales slowed immediately after demonetisation. New applications, however, for home loans started growing from January which saw 21% growth over December. February had reported 16% growth over January; and March had 44% growth over February, added Mistry.
 

India's banks too are focusing on affordable housing to take advantage of incentives offered by the government to home buyers and to counter the absence of demand for credit from other sectors of the economy. 

Over the last one year, home loan interest rates have also eased.

Last week, Business standard reported that State Bank of India (SBI) had reduced its interest rate by 25 basis points (bps) on home loans up to Rs 30 lakh, to 8.35 per cent, for new women borrowers. For male borrowers, the cut is by 20 bps, to 8.4 per cent. 

And, even at the earlier rates, SBI offered the lowest. Housing Development Finance Corporation, second largest in the space, offers loans at 8.65 per cent to women for loans up to Rs 75 lakh and 8.7 per cent for others. So does ICICI Bank, the largest private lender.