Amid rising interest rates in the country after the RBI’s recent repo rate hikes and increasing property prices, housing sales in seven major cities saw a moderation of 15 per cent in the June 2022 quarter to 84,930 units, compared with 99,550 units in the March 2022 quarter, according to a report by real estate consultancy firm Anarock. The Mumbai Metropolitan Region (MMR) witnessed the highest sales of about 25,785 units in Q2 2022, followed by the NCR with nearly 15,340 units.
The report added that developers restricted new supply to about 82,150 units in the June 2022 quarter as against 89,150 units in Q1 2022, an eight per cent decline during the period. The MMR and Pune were the only markets to see new launches increase by 26 per cent and 14 per cent q-o-q, respectively. The remaining top-five cities saw reduced new launches.
It added that the MMR saw about 29,730 units added in Q2 2022, while Pune added nearly 16,560 units. The national capital region (NCR) saw a massive 56 per cent drop in new supply — from 9,300 units in Q1 2021 to about 4,070 units in Q2 2022.
The seven major cities — NCR, MMR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata — recorded 82,150 new units launched in Q2 2022 as compared with 89,150 units in Q1 2022, an 8 per cent decrease over the previous quarter.
The key cities contributing to new unit launches in Q2 2022 were MMR (Mumbai Metropolitan Region), Hyderabad, Pune, and Bengaluru, which together accounted for 91 per cent of the new supply addition. Only MMR and Pune saw increased new launches.
Anuj Puri, chairman of ANAROCK Group, said, “Inflationary pressures on input costs compelled developers to increase property prices in the past few months, and RBI unleashed two rate hikes that swelled up home loan interest rates. These two factors combined to hike the overall property acquisition cost for homebuyers, leading to a dip in housing sales. The fact that after two years, there was no new Covid-19 wave to disrupt family travel plans during the school vacation months (April to June) could also have impacted sales.”
He added that as for the declining new launches, developers would have held back fresh supply while they sought clarity on the unfolding market sentiments amid increased housing purchase costs. “Given that we saw two back-to-back quarters of robust housing sales and new launches (Q4 2021 and Q1 2022), a dip was to be expected.”
About 29,730 units were launched in MMR, an increase of nearly 26 per cent from Q1 2022. Over 66 per cent of the new supply was added in the Rs 40 lakh to Rs 2.5 crore budget segment.
Pune added that around 16,560 units in Q2 2022, a q-o-q increase of 14 per cent over the previous quarter. Over 73 per cent of the new supply was added in the sub-Rs 80 lakh budget segment.
Hyderabad added about 15,780 new units in Q2 2022 as compared with 21,550 units in Q1 2022, a 27 per cent decrease. Over 92 per cent of the new supply was added in the Rs 40 lakh-Rs 2.5 crore budget segment.
Bengaluru added 12,510 units in Q2 2022, a marginal quarterly decline of 5 per cent. About 74 per cent of the new supply was in the mid and upper mid-segment (Rs 40 Lakh-Rs 1.5 crore).
NCR saw a significant decrease of 56 per cent in new launches during this versus the previous quarter, with nearly 4,070 units launched in Q2 2022.
Chennai added around 1,480 units in Q2 2022, a quarterly decrease of 52 per cent over the previous quarter. About 65 per cent of the new supply was added in the sub-Rs 1.5 crore budget segment.
Kolkata added about 2,020 units in Q2 2022, a massive decrease of 48 per cent over Q1 2022. Around 65 per cent of the new supply was added in the Rs 40 lakh-Rs 1.5 crore budget segment.
To control inflation, the Reserve Bank of India (RBI) in early June raised the key repo rate by 50 basis points (bps), which was the second hike within almost as month after the central bank’s Monetary Policy Committee increased 40 basis points in off-cycle policy review in May. The retail inflation in May stood at 7.04 per cent, which is higher than the RBI’s target limit of 2-6 per cent.