Builders crank up home prices amid surging demand; unsold stock down
A resurgence in residential demand has led to a 5% increase in prices across the top eight cities while registering a marginal decline in unsold inventory during Q2 2022, according to a Colliers-CREDAI report.Top residential markets like Delhi-NCR, MMR, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad, which have surpassed pre-pandemic levels, have been witnessing an upward trend led by rising demand amidst rising prices of construction materials.
Delhi-NCR saw the highest increase in residential prices at 10% year-on-year, followed by Ahmedabad and Hyderabad with 9% and 8% year-on-year increases, respectively.
"Rising homeownership amongst millennials, supported by higher disposable income and willingness to upgrade to larger spaces equipped with better amenities, has sparked a sharp growth in housing demand in the last few quarters. This has led to strong growth in housing sales in the last few quarters, " said Ramesh Nair, CEO, India & Managing Director, Market Development-Asia, Colliers.
According to property brokers, prices have been on an upward trend since the beginning of CY 2022, with the sector poised for a strong year after scaling another sales peak in Q2 2022.
Listed companies like Lodha, Puravankara, and Prestige Group continue to see good momentum across all segments, with the affordable and mid-income segments being particularly strong.
"Pricing is expected to remain range-bound. With discounted EMI schemes, we see early signs of developers absorbing the impact of increasing interest rates. Sales volumes are likely to improve as we see growing new supply with festive offers," said Pankaj Kapoor, Managing Director, Liases Foras.
The unsold inventory also witnessed a downward trend despite rising prices and an increase in new launches in the last few quarters.
The sales momentum that started in the latter part of last year also continued in Q2 2022 as well, led by pent-up demand and attractive pricing.
Bengaluru witnessed the steepest decline of 21% y-o-y in its inventory overhang, led by higher sales.
Other markets like Hyderabad, MMR, and Ahmedabad saw an increase in unsold inventory, which was led by significant new launches.
MMR still accounts for the highest share of unsold inventory at 36%, followed by 14% in Delhi-NCR and 13% in Pune.
"The central bank continues to increase repo rates to offset the impact of inflation, and banks are expected to increase loan interest rates, including that of home loans. We may see a marginal dip in demand due to increasing interest rates, but I am confident that the sales will continue to grow across segments from September, as we enter the festive season," Harsh Vardhan Patodia, President of CREDAI National, said.
According to property brokers and builders, the April-June quarter recorded strong sales despite the repo rate increase by the RBI. However, a further revision in the repo rate may have a marginal impact on the sector that has bounced back after years of lull.
( Originally published on Aug 17, 2022 )
This story originally appeared on: Muscle & Fitness - Author:Tax Cognition
