Residential market continues to struggle with sluggish growth

Moneylife Digital Team 05 February 2015

According to a report from Liases Foras, despite improvement in sales in the residential market during the December quarter, overall growth continues to fall as it witnesses a 1.1% decline since FY14

The latest quarterly report released by Liases Foras reveals that the realty sector has witnessed a few improvements this quarter, but continues to wrestle with poor growth. Yearly sales across six major cities witnessed a 1.1% decline, while the unsold stock has increased by 17% since the last financial year. The report provides data for the third quarter of FY15 and focuses on six major cities – Bengaluru, Chennai, Hyderabad, Pune, Mumbai Metropolitan Region (MMR) and National Capital Region (NCR).

Liases Foras said, growth in prices across these cities ranged from 3% to 9.5% except in Bengaluru where it dropped by 0.39%. Average prices across these cities remained relatively stable and did not witness any remarkable acceleration. There was a marginal decline in the weighted average price of Bengaluru and Hyderabad by 2.05% and 2%, respectively.

There are positive movements with respect to sales, which were up by a good 31% from the previous quarter. Hyderabad and NCR witnessed maximum recovery, with a 55% and 60% growth in sales respectively. However, it is important to note that Q2 FY15 was the worst quarter with respect to sales in the past five years. “33% of sales happened in the cost bracket of Rs50 lakh to Rs1 crore followed by the cost bracket of Rs25 lakh to Rs50 lakh, which constituted 31% of the sales. Two BHKs contributed to 32% of the sales, while 33% was contributed by the sale of 3 BHKs,” Liases Foras said.

According to the report, another positive improvement can be seen in terms of efficiency, where except MMR, all other cities saw a decline in the month’s inventory. NCR witnessed a remarkable change from an inventory standing at 83 months in the previous quarter to 51 months this quarter.

While the unsold stock in the six cities increased by 2% this quarter, the new supplies have declined by 9%. According to the report of the total new additions, 39% were in the cost range of Rs50 lakh to Rs1 crore followed by the cost range Rs25 lakh to Rs50 lakh, which contributed 32%.”

Most significant contributions to new supply came from MMR and Bengaluru (21% and 36% respectively). MMR was the only city, which witnessed a significant growth in new supply in the price range of over Rs2 crore, followed by NCR and Bengaluru. Interestingly, in MMR, new supplies for the relatively more affordable housing (in the price range of Rs50 lakh to Rs1 crore) were the lowest. New supplies in the price range of Rs25-50 lakh were prominent only in NCR and Pune, Liases Foras said.

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