Housing sales fall 26%, launches decline 51% in March quarter: PropTiger report

New Delhi:  Housing sales in India’s prime residential markets declined 26% during the last quarter of FY20 amid the government imposing a lockdown in March in order to contain the effects of the coronavirus pandemic, says a recent report by online property brokerage firm PropTiger.com.
According to the report titled, “Real Insight: Q4 FY20”, a total of 69,235 units were sold during the quarter ending March as against 93,936 units sold during the same quarter last fiscal. 
The report by PropTiger, owned by Elara Technologies that also owns Housing.com and Makaan.com, also showed that new unit launches during the quarter ending March 31, 2020 fell 51% year-on-year because of the ongoing liquidity issues being faced by real estate developers. During the three-month period between January and March, only 35,668 units were launched across India’s top nine residential markets, which include Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Kolkata, Mumbai, Pune and Noida.  In the same quarter last fiscal, a total of 72,932 units were launched across these markets. 
On a quarter-on-quarter basis, housing sales fell 11% while launches declined 27% in Q4 FY20, the report shows. 
 “While the Chinese economy has been reeling under the impact of the coronavirus contagion since December 2019, the situation started to get worrisome in India only in March. Following the spike in number of infections, the government first announced a 21-lockdown on March 24, and then appropriately extended it till May 3, keeping in mind the severity of the situation. The lockdown, which has virtually brought to a standstill most economic activity in the country, has hurt all sectors, including real estate. The adverse impact of the corona virus is visible on housing sales in the last quarter of the last fiscal because March is usually one of the biggest month for sales,” says Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com.
During the three-month period, the lowest number of sales was recorded in March because of the lockdown, shows the report. 
Sales decline the most in Gurugram 
While housing sales fell across cities during the quarter, they declined the most in Millennium City, Gurugram, falling 73% y-o-y. Sales also fell significantly in Kolkata (41%), Hyderabad (39%) and Ahmedabad (36%). 
Inventory Fall 15%
Some relief to the sector, however, came in the form of reduced unsold stock, which declined 15% year-on year. Real estate developers in India’s top nine residential markets have an unsold stock totalling 738,898 units as on March 31, 2020. On a Q-o-Q basis, inventory stock fell 6%.
No improvement, however, was seen in inventory overhang, which stood at 27 months, exactly the same as the past three quarters. However, when compared to Q4FY19, inventory overhang declined by two months. 
Inventory overhang is the time in months builders are expected to take to sell off existing stock, factoring in the current sales velocity.  
Price change
Barring Gurugram, where prices fell 1% when compared to the March quarter last year, property values have shown an upwards movement in other cities, even if only marginal. 
At 9%, the highest annual appreciation in prices was seen in Hyderabad, followed by a 6% increase in Ahmedabad. Prices showed no change in Chennai. In other cities, the increase was between 1-4% on an annual basis. 

“While the short-term negative impact of the pandemic on sales was evident in the Q4FY20 numbers, which is also expected to continue in the current quarter (Q1FY 21), we hope that the various support measures announced by the government and the RBI would start yielding positive results in the medium term. Also, the lock-down is likely to bring about a major change in consumer behavior going forward. The early indications of that are already there. While physical site visits to properties have stopped completely, online searches as well as online bookings of apartments continue to take place. The adoption of digital platforms is likely to go up in the coming months. Much like mobile phone manufacturers that launch new products on a digital platform before a launch on traditional offline channels, we believe several real estate firms particularly the reputed names will adopt a similar strategy in the coming weeks and beyond.,” Mr. Agarwala adds.
The RBI has reduced the repo rate to 4.4% in order to bring down interest rates and it has also cut the reverse repo rate to 3.75% recently to boost liquidity.  Apart from that it has also announced a three-month moratorium period on term loans to offer relief to borrowers whose incomes might have been impacted because of the lockdown. The government has also announced a $22.6-billion stimulus package to provide direct cash transfers and food security measures to millions of poor people in the country who are most vulnerable to the lockdown
* (The cities coved in the analysis are Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Pune and Noida (includes Greater Noida, Noida extention and Yamuna Expressway))
* Primary market data research hence dose not factor in resale value