Amid rising interest rates in the country following recent RBI repo rate hikes and rising property prices, home sales in seven major cities have seen a moderation of 15% in the June 2022 quarter to 84,930 units, compared to 99,550 units in the March 2022 quarter, according to a report by real estate consultancy Anarock. The Mumbai Metropolitan Region (MMR) recorded the highest sales of around 25,785 units in the second quarter of 2022, followed by the NCR with almost 15,340 units.
The report adds that developers limited new supply to approximately 82,150 units in the June quarter of 2022 from 89,150 units in the first quarter of 2022, a decline of 8% over the period. MMR and Pune were the only markets to see new launches up 26% and 14% QoQ, respectively. The remaining five cities saw their new launches decrease.
He added that MMR saw around 29,730 units added in the second quarter of 2022, while Pune added almost 16,560 units. The National Capital Region (NCR) has seen a massive 56% decline in new supply, from 9,300 units in Q1 2021 to approximately 4,070 units in Q2 2022.
The seven major cities – NCR, MMR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata – saw 82,150 new units launched in the second quarter of 2022 compared to 89,150 units in the first quarter of 2022, down 8% from the previous quarter .
The top cities contributing to new unit launches in Q2 2022 were MMR (Mumbai Metropolitan Region), Hyderabad, Pune and Bengaluru, which together accounted for 91% of new supply. Only MMR and Pune saw an increase in new launches.
Anuj Puri, Chairman of ANAROCK Group, said: “Inflationary pressures on input costs have forced developers to raise property prices in recent months, and RBI has triggered two rate hikes which have inflated mortgage interest rates. These two factors have combined to increase the overall cost of acquiring a property for homebuyers, resulting in lower home sales. The fact that after two years there has not been a new wave of Covid-19 to disrupt family travel plans during the school holiday months (April to June) may also have impacted sales.
He added that when it comes to the drop in new launches, developers are said to have held back fresh supply as they seek to clarify ongoing market sentiments amid rising home buying costs. “Given we’ve had two consecutive quarters of strong home sales and new launches (Q4 2021 and Q1 2022), a decline was to be expected.”
Around 29,730 units were launched in the MMR, an increase of almost 26% from the first quarter of 2022. Over 66% of the new supply was added in the budget segment Rs 40 lakh to Rs 2.5 crore .
Pune added that about 16,560 units in the second quarter of 2022, a quarterly increase of 14% from the previous quarter. Over 73% of the new supply was added in the budget segment below Rs 80 lakh.
Hyderabad added around 15,780 new units in Q2 2022 compared to 21,550 units in Q1 2022, a decline of 27%. Over 92% of the new supply was added in the Rs 40 lakh-Rs 2.5 crore budget segment.
Bengaluru added 12,510 units in the second quarter of 2022, a marginal quarterly decline of 5%. About 74% of the new supply was in the mid-to-upper segment (Rs 40 Lakh-Rs 1.5 crore).
NCR saw a significant 56% decline in new launches this quarter compared to the prior quarter, with nearly 4,070 units launched in the second quarter of 2022.
Chennai added around 1,480 units in the second quarter of 2022, a quarterly decline of 52% from the previous quarter. About 65% of the new supply has been added in the budget segment below Rs 1.5 crore.
Kolkata added around 2,020 units in the second quarter of 2022, a massive decrease of 48% from the first quarter of 2022. Around 65% 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) raised the policy rate in early June by 50 basis points (bps), which was the second hike in nearly a month after the Monetary Policy Committee of the central bank rose 40 basis points in off-cycle policy review in May. Retail price inflation in May stood at 7.04%, which is above the target limit of 2-6% set by the RBI.
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