Mumbai leads housing market recovery in Q1; new launches rise 33%

The latest data from Knight Frank shows that property registration in the largest market - Mumbai Metropolitan Region - hit a decadal high in July

Lockdowns and travel curbs may have hit the residential real estate market in April and May, but the market showed signs of life as soon as the restrictions were relaxed. While the overall sales in major markets dipped in the April-June quarter, the total offtake grew handsomely over last year.
 
Led by two prominent markets —Mumbai and Bengaluru — that were hit hard during the second Covid wave, the country’s housing market is charting its course to recovery. The latest data from Knight Frank shows that property registration in the largest market - Mumbai Metropolitan Region (MMR) - hit a decadal high in July. At 9,037, the number of registrations was the highest in July since 2011.
 
According to property consultant JLL, the April-June quarter sales of residential units grew 1 per cent in Mumbai over the previous quarter. New launches surged 33 per cent quarter-on-quarter (QoQ).
 
In Bengaluru, traditionally the largest market after MMR and the National Capital Region of Delhi (Delhi-NCR), it jumped 47 per cent.
 
According to Shishir Baijal, chairman and managing director, Knight Frank India, property registrations in Mumbai have grown steadily since May.
 
“New registrations in July have also shown an encouraging increase and bear testimony to the fact that demand for new homes remains intact,” said Baijal.
 
“The calibrated reopening of economic activity has resulted in an upward trajectory of home-buying demand and sales in June on the back of stability and security it offers during a crisis,” said Niranjan Hiranandani, national president of National Real Estate Development Council. According to him, pent-up demand, historic low home loan rates, and government interventions like stamp duty waiver, are lifting market sentiment.
 
While the top two metros in the West and South are raising hopes, the market in the North - led by Delhi-NCR - remains a matter of concern. Home sales in the second-largest market dwindled in April-June and fell 55 per cent QoQ.
 

Moreover, a latest proposal by the Uttar Pradesh government to hike circle rates in the Noida-Greater Noida region and along the Yamuna Expressway (e-way) by up to 40 per cent has raised concerns. It has also proposed an additional surcharge of 5-12.5 per cent on properties along the Metro route or near the e-way.
 
“This could not have come at a less ideal time. The NCR real estate market has only just begun recovering. A softer pricing regime would have encouraged more buyers still struggling with the economic impact of the pandemic,” said Anuj Puri, chairman, Anarock Property Consultants.
 
The overall sales in the top seven markets took a hit of 23 per cent QoQ, but grew 83 per cent year-on-year (YoY). As the market exerted greater resilience against the second wave, compared to the first one in 2020, the total sales surged 18 per cent YoY during the first half (H1) of 2021 to 45,218 units.
 
According to Ram Raheja, director, S Raheja Realty, "Real estate stakeholders' preparedness in 2021 has helped residential sales in H1 of 2021 exceed the H1 of 2020 levels. Also, the increased need to own a home, low interest rates, and stamp duty cuts in some key markets, were the primary drivers of increased sales traction during H1 of 2021."
 
“Most of the changes observed in the sector have been structural in nature and the demand for homes is only expected to increase,” said Samantak Das, chief economist and head research and REIS, India, JLL.
 
In spite of growth, the 2021 numbers fell short of pre-Covid levels. Compared to H1 of 2019, the latest numbers remain 42 per cent lower and are at the levels of H2 of 2017.
 
Market analysts and realtors are, however, hopeful of sustaining the momentum. According to Raheja, new launches in H1 of 2021 grew 71 per cent YoY.
 
“The Reserve Bank of India is expected to hold policy rates at the existing historically low levels, while prices will remain mostly range-bound. The resultant affordable buoyancy will continue to attract fence-sitters and serious homebuyers,” said Das.