Homes sales, new supply improve in 2021 driven by policy initiatives and improved buyer sentiment: PropTiger.com report

21 Feb 2022 , 11:32 AM

Real estate activity in India’s leading housing markets intensified towards the second half of 2021, after a grim 18 months in which Asia’s third-largest economy was consistently battered by multiple waves of the coronavirus pandemic, shows the latest report by PropTiger.com, the country’s leading online real estate brokerage company.

According to the report titled Real Insight Residential — Annual Round-up 2021, home sales in India’s eight prime housing markets increased 13% in 2021, when compared to the overall sales in 2020. The figures include the sales numbers for all the four quarters in both calendar years.
A much sharper growth was seen in terms of new supply in 2021 as against 2020—a total of 2.14 lakh units were launched in 2021 compared to 1.22 lakh units in the preceding year, showcasing an upward swing of 75%.

This improvement in key growth metrics for the sector, the second-largest employment generator in India after agriculture, could largely be attributed to support measures launched by the government in the aftermath of the coronavirus pandemic, improved consumer sentiment, stable prices and historically high housing affordability.

Mumbai, Pune steer sales upswing

Builders sold 2,05,936 housing units for the full year 2021 as against 1,82,639 units in 2020. This growth in sales was largely driven by India’s financial capital Mumbai, where a total of 58,556 homes were sold in 2021. Closely following the Maximum City was its neighbour Pune, where a 9% jump resulted in sale of 42,425 apartments last year, the report by the Gurgaon-headquartered real estate firm shows.

Flexible payment plans continue to keep homebuyers inclined towards under-construction homes, which made up for 80% of the home sales during the year, the report adds.

Sales	2021	2020	QoQ	YoY
City	Qtr4	Qtr3	Qtr4
Ahmedabad	5,423	5,483	3,125	-1%	74%
Bengaluru	9,414	6,547	7,660	44%	23%
Chennai	3,213	4,665	3,180	-31%	1%
Delhi NCR	4,433	4,458	6,065	-1%	-27%
Hyderabad	4,277	7,812	6,487	-45%	-34%
Kolkata	2,610	2,651	2,518	-2%	4%
Mumbai	22,438	14,163	18,331	58%	22%
Pune	16,077	10,128	11,548	59%	39%
Total	67,885	55,907	58,914	21%	15%

Source: Real Insight Residential — Annual Round-up 2021, PropTiger Research

Annual Sales
City	2021	2020	YoY
Ahmedabad	16,875	12,156	39%
Bangalore	24,983	23,458	7%
Chennai	13,055	10,452	25%
Delhi NCR	17,907	17,789	1%
Hyderabad	22,239	16,400	36%
Kolkata	9,896	9,061	9%
Mumbai	58,556	54,237	8%
Pune	42,425	39,086	9%
India	2,05,936	1,82,639	13%

Source: Real Insight Residential — Annual Round-up 2021, PropTiger Research

Buyer sentiment driving new launch wave

Amid a visible change of approach towards housing ownership among consumers in the aftermath of the pandemic, real estate developers in India stepped up efforts to offer better housing choices in 2021. As a result of this, barring Chennai where a marginal decline was seen, new supply showed a jump in all cities covered in the analysis during the year.

“Beyond the numbers which speak for themselves, what is remarkable is the resilience of the real estate market in India. Despite multiple waves of the pandemic, which resulted in multiple lockdowns, the residential real estate market has not only bounced back but is also on the cusp of a cyclical upturn. With policy support from the government and the low interest rate regime maintained by the RBI, I am very confident about the sector, entering into 2022,” said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com&PropTiger.com.

“Developers have been quick to respond to the positive changes in buyer sentiment, as evidenced by the offers available in the market, especially during the festive season of 2021, which resulted in improved metrics for both, demand and supply.  Basis the data available with us, it seems very likely that we will see an increase in prices in 2022, even as the inventory overhang continues to decline in 2022. The biggest trend we foresee is that the real estate market will continue to consolidate its growth in 2022 as well,” said RajanSood, Business Head, PropTiger.com.

New Launch	2021	2020	QoQ	YoY
City	Qtr4	Qtr3	Qtr4
Ahmedabad	17,311	13,440	3,003	29%	476%
Bengaluru	8,524	3,072	6,104	177%	40%
Chennai	3,797	2,332	4,887	63%	-22%
Delhi NCR	6,021	1,748	5,120	244%	18%
Hyderabad	19,809	12,342	12,723	61%	56%
Kolkata	1,944	442	1,658	340%	17%
Mumbai	9,868	21,820	10,070	-55%	-2%
Pune	7,035	10,015	10,764	-30%	-35%
Total	74,309	65,211	54,329	14%	37%

Source: Real Insight Residential — Annual Round-up 2021, PropTiger Research

Increase in raw material price pushed property prices up in 2021

Consistent increase in raw materials prices is pushing up property prices, with all eight prime residential markets covered in the report showing annual increase in per square foot price of new properties. Ahmedabad and Hyderabad housing markets were leading this pack, with an annual price hike of 7% each in 2021.

City-Wise Price card
City	Weighted average price in Rs per square foot as on December 2021	YoY % growth
Ahmedabad	3,400-3,600	7%
Bangalore	5,500-5,700	6%
Chennai	5,400-5,600	5%
Delhi NCR	4,400-4,600	5%
Hyderabad	5,900-6,100	7%
Kolkata	4,300-4,500	5%
Mumbai	9,700-9,900	4%
Pune	5,100-5,300	3%
India	6,300 – 6,500	6%

Source: Real Insight Residential — Annual Round-up 2021, PropTiger Research

Inventory overhang declines to 3.5 years

The improvement in sales in 2021 has been instrumental in lowering the inventory burden for India’s real estate developers. Consequently, inventory overhang — the estimated time builders would take to sell off the existing unsold stock, based on the current sales velocity— has now declined to 42 months. As on December 31, 2021, builders had an unsold stock consisting of 7,26,943 units in India’s eight housing markets.  While the inventory overhang is the highest for the Delhi-NCR market at 68 months, it is the lowest for Kolkata, at 31 months.

India’s inventory burden
City	Unsold stock on December 30, 2021	Inventory overhang in months
Ahmedabad	63,096	45
Bangalore	66,754	32
Chennai	35,729	33
Delhi NCR	1,02,147	68
Hyderabad	65,635	35
Kolkata	25,716	31
Mumbai	2,48,815	51
Pune	1,19,051	34
India	7,26,943	42

Source: Real Insight Residential — Annual Round-up 2021, PropTiger Research