India’s home sales increase 185% in the second quarter of 2021

V Nagarajan

India’s residential segment has performed remarkably well during the first half of this year. Sales across the top 8 cities grew by 185 per cent year on year (YoY) in the second quarter (Q2) of 2021 and by 67 per cent YoY in H1 2021.

In all 103,238 units were launched during H1 2021, a 71 per cent increase YoY.

The improved consumer perception of owning a house was supported by low home mortgage rate, competitive house prices and developer driven flexible payment schemes, according to Knight Frank research survey. In markets like Mumbai, Pune and Bengaluru, government intervention through stamp duty cuts also served as a catalyst to reignite latent demand.

The second wave of COVID-19 infections stalled the momentum and Q2 2021 saw a sequential drop of 62 per cent and 43 per cent in the volume of sales and launches respectively during the period.

The impact on residential market traction has been seen more as a speed-bump rather than a major obstruction, especially as sales volumes have shown a strong growth of 67 per cent YoY to 99,416 units. Volumes during H1 2021 grew 5 per cent compared to H2, 2020, and was not impacted by the resurging pandemic. Developers also upped the ante by launching new projects to capitalise on the improving sentiment despite a significant rise in the cost of input material such as cement and steel.

There was comparatively lesser impact on development activity during the second wave as the exodus of labour was better managed with developers committing to arrange their accommodation on-site. As many as 103,238 units were launched during first half of 2021, a 71 per cent increase YoY.

It is also noteworthy that the launch volumes in a pandemic impacted period like H1 2021 was 20 per cent higher than the relatively unaffected H2 2020 period.

Mumbai and Pune accounted for 46 per cent of the sales during the first half of 2021 as the stamp duty cut in Maharashtra bolstered the sales volumes till March 2021. The impact of this measure can be gauged from the fact that the share of the two cities had averaged much lower at 38 per cent in the 2010-2019 period.

Karnataka was the only other state to have offered a stamp duty cut, albeit with a relatively limited scope and in comparison, the stamp duty cut in Karnataka did not have the same impact. Its share of sales during H1 2021 at 15 per cent remained marginally lower than its long term average of 16 per cent.

Hyderabad showed the most growth in H1 2021 in sales as well as launches which grew 150 per cent and 278 per cent YoY respectively. Bengaluru recorded sales of 14,812 units – a growth of 22 per cent YoY. In Chennai, residential sales jumped up by 93 per cent YoY and launches grew by 51 per cent in H1, 2021. Kolkata witnessed sales of 5,115 residential units, a 74 per cent YoY increase over H1 2020.

In NCR, sales of residential units in primary market nearly doubled compared to the H1 2020 volume.

On the economic front, exports in April-May 2021 have recorded a healthy growth of 12.6 per cent.

FDI inflows are at $82 billion in FY 2021.

India currently has a comfortable forex reserve of over $608 billion. India has seen vaccination of around 4 million doses per day in June 2021 and this needs to rise to over 10 million doses per day to achieve full vaccination of the adult population by year end.

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