Home sales rise 67% in H1 2021 on the back of growth in Mumbai, Pune mkts

Home sales rose 67 per cent in the first half of the year on the back of growth in markets like Pune and Mumbai in the same period, says a new report by Kinght Frank.

The top 8 cities saw total sales of 99,416 residential units in H1 2021, while new launches in the same period (January – June 2021) were recorded at 103,238 units, according to the report.

During the early part of this year, sales volumes were greatly influenced by  two markets – Mumbai and Pune – which together constituted over 45 per cent of the total sales among key markets, Knight Frank said, adding, "These two markets were given their orbital velocity by the Maharashtra government’s decision to lower stamp duty rates for a limited period. While residential sales started to show a resurgence, the momentum was impacted by the second wave of the Coronavirus (Covid-19) pandemic, which started towards the end of March 2021," it said.

As sales volumes stabilised, especially in the early part of H1 2021, unsold inventory fell by 1 per cent over the same period last year. Prices remained mostly contained with a reduction of 1% to 2% year-on-year (YoY), it said.

A clear effect of the Covid-19 pandemic was seen in the share of mid-range and high-end property segments, Knight Frank said. The sales of homes costing less than Rs 50 lakh fell by around 500 basis points (BPS) and constituted 42 per cent of all sales in the January-June 2021 period. Homes costing over Rs 1 crore constituted about 19 per cent of all sales, while units at Rs 50 lakh to 1 crore improved by about 400 BPS and came in at 39 per cent. The falling proportion of affordable homes (costing less than Rs 50 lakh) is directly related to the challenges thrown up by the Covid-19 pandemic which impacted the economic confidence of home buyers in the category due to the threats of job loss, reduced income, inching CPI and other challenges, it said.

New launches in H1 2021 rose by 71 per cent YoY and not surprisingly, were led by the two markets of Mumbai and Pune in Maharashtra. A majority of the new launches were recorded in the first quarter of the year, while the impact of the second wave in Q2CY2021 was felt in equal proportion by developers which impacted launches as well. Q2CY2021 accounted for a little more than a fourth of all launches in H1 2021. However, a comparison with the pandemic-hit quarter from a year ago shows that Q2CY2021 recorded a YoY growth of 388 per cent over Q2CY2020.

“The gradual resumption of economic activity and increasing availability of the vaccine had sparked market traction in the second half of 2020 and this momentum carried over into Q1CY2021. The second wave of Covid-19 infections has impeded this momentum but should be seen as more of a speed bump as YoY growth in market volumes remains strong in half-yearly and quarterly terms in the January to June 2021 period. The limited period stamp duty cut which spiked home sales in Mumbai and Pune adequately demonstrates the need for policy level  intervention to revive the residential market. Going by the tremendous success of the stamp duty cut in Maharashtra, other states may also consider similar demand stimuli at appropriate times that will not only help sales velocity but also propel economic activity,” said Shishir Baijal, chairman and managing director, Knight Frank India.

Price levels in four of the 8 markets were seen at the same level or growing marginally YoY in H1 2021. In comparison, just one market was able to maintain price stability in H2 2020. While developers offered flexible payment schemes to push sales across markets, the incidence of direct discounts was markedly lower during H1 2021.