Sales Decline for First Time in Three Years, Despite Year-on-Year Growth in Most Markets

Sales Decline for First Time in Three Years, Despite Year-on-Year Growth in Most Markets

India's Housing Market Shows Signs of Fatigue

After three and a half years of steady growth, India's housing market is showing signs of fatigue among homebuyers. New home sales declined for the first time in the April-June quarter, marking a shift from the consistent growth witnessed in the country's top seven markets.

Data from Anarock Property Research reveals an 8% sequential decline in sales during the June quarter (Q2). Approximately 120,340 housing units were sold, compared to 130,170 units in the January-March quarter (Q1). Hyderabad witnessed the steepest decline, with a 23% drop quarter-on-quarter. Other cities experiencing a decline include Kolkata (-18%), Chennai (-9%), Bengaluru (-8%), and Pune (-8%). The Mumbai Metropolitan Region, the country's largest real estate market, saw a 3% sequential decline in sales.

Delhi-NCR was the only exception, with home sales growing 6% quarter-on-quarter to 16,550 units. However, due to a steady decline in sales over the past two years, the Delhi-NCR market has shrunk considerably and now occupies the fifth position in the pecking order.

Analysts attribute the slowdown to the high base record of the previous quarter and increasing property prices. "The quarterly decline seen in housing sales is essentially because of the all-time high base considered in the previous quarter, when more than 1.30 lakh units were sold," says Anuj Puri, Chairman of Anarock Group. "Most importantly, this drop is also due to the significant hike in property prices over the last one year, which in turn has prompted many investors to take a breather."

Despite the sequential fall, sales grew on a year-on-year basis in most markets, albeit at a slower pace. Overall, the housing market grew 5% year-on-year to 115,090 units. However, sales declined by 20% in Kolkata and 9% in Chennai.

New launches during the quarter increased 6% quarter-on-quarter across India. However, markets like Hyderabad (-40%), Chennai (-29%), and Kolkata (-50%) recorded a significant fall in new home supply. Delhi-NCR and MMR, on the other hand, witnessed a growth of 134% and 31%, respectively, in new supply.