PropTiger.com, part of Elara Technologies Pte Ltd which also owns Housing.com and Makaan.com, today released the findings of its ‘Real Insight Report’ for Q4 FY’19. As per the report, homes sales in India’s nine key property markets declined 5% year-on-year (y-o-y) and new project launches fell 32% annually during Q4 FY’19. However, the unsold housing stock declined by 10% during the same period. Mani Rangarajan, Group Chief Operating Officer, Elara Technologies said, “While there might not be any significant improvement in new launch and home sales numbers in the first quarter of FY20, things may start to change after the results of the Lok Sabha elections are announced. In fact, as more clarity emerges pertaining to GST issues, these numbers might see improvement in the quarters that follow. Property rates would also see an upwards movement in the times to come.” As against 79,601 units in the Q4 FY’18, developers in the nine property markets together sold 75,706 units in the same quarter in FY19. The report attributes this decline in home sales numbers to the changes in the Goods and Services Tax (GST) transition rules.The GST Council has given developers time till May 10 to choose between the old tax rates and the new rates to help resolve input tax credit issues.
Realtors opting for new GST rates, which are lower than the old rates, will not be able to claim input tax credit. Despite an overall decline in numbers, home sales in some cities increased in Q4, including Hyderabad, Gurugram, Pune and Mumbai. At 26%, homes sales increased the highest in Hyderabad in the quarter ending March 2019. Noida, on the other hand, saw sales declining 50% during the same period over the previous year. At 23%, home sales also fell significantly in India’s information capital Bengaluru. Except Chennai, Pune and Gurugram, new launches fell across cities, resulting in an overall decline of 32% in Q4 y-o-y. Ahmedabad, Kolkata, Bengaluru and Mumbai saw the sharpest fall in launches during the quarter. The Chennai property market witnessed an opposite trend with launches more than doubling during y-o-y.
After the country launched the real estate law in 2016, developers in India have been cautious about launching new projects as the law imposes strict penalties in case of project delays. Huge unsold housing stock has been also been forcing developers to refrains from launching new projects and focus on selling the existing inventory. A cautious approach among developers to improve sales and restrict launches resulted in a fall of 10% in the unsold housing stock in Q4 FY’19 when compared to the same quarter the previous year. As against 890,719 units in Q4 FY’18, the unsold housing stock in the nine markets stood at 800,438 units in Q4 FY’19. Apart from Ahmedabad and Chennai, unsold inventory declined in all the other cities. Overall inventory overhang, too, reduced significantly to 30 months in Q4 FY’19 from 39 months in Q4 FY’18.
While Hyderabad has the lowest inventory overhang at 17 months, it is the highest in Ahmedabad, at 40 months. Except Hyderabad, where prices increased 14% y-o-y, rates of property across cities have remained almost unchanged – either increasing or decreasing only marginally – in the past one year. The report, however, indicates that prices may see an upwards movement in future as developers start adjusting rates to include the impact they would suffer due to loss of input tax credit on GST payment. The study covered nine key Indian cities of Mumbai, Pune, Noida, Gurugram, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.