India’s home sales reaches a new high in third quarter of

V Nagarajan

The Indian economy continues to gain strength with improving sentiments in the residential market since the beginning of last year. Sales volumes during the year scaled a nine-year high.

While low interest rates and comparatively low residential prices sparked a surge in demand in the beginning, the momentum in residential sales has sustained even as an inflationary environment forced the RBI to push up the repo rate by 250 bps to 6.5%, a level not exceeded since 2016, according to a survey by Knight Frank India.

Residential demand in Q3 this year trended up significantly to 82,612 units, 12% higher in YoY terms and 7% higher compared to the preceding quarter.

This is particularly noteworthy considering that it constitutes an almost six-year high in quarterly sales volumes.

Sales traction was higher across all markets in YoY terms. Among the larger markets, the NCR stood out with a 27% growth in sales during the quarter.

Consistent with the upward trend seen in the past seven quarters, the share of sales in the INR 10 million and above ticket-size grew significantly to 35% in Q3 2023 compared to 28% a year ago.

This can be attributed to the homebuyers’ need to upgrade to larger living spaces with better amenities.

The share of home sales in the INR 5-10 million category remained steady at 36% in Q3 2023.

The share of the INR 5 million and below ticket-size, however, deteriorated from 36% in Q3 2022 to 29% in Q3 2023, as increasing prices, home loan rates and the comparatively adverse impact of the pandemic on homebuyers in this segment continued to weigh on demand.

In another first, the mid-size and premium segments each constituted a larger slice of the sales pie than the INR 5 million and below category.

Supply levels at 85,549 units were significantly elevated compared to sales, 23% higher in YoY terms during Q3 2023, as developers continued to capitalise on the steady homebuyer demand and consistently launched new projects to match the contemporary needs of the homebuyer.

Price levels in Hyderabad saw the most significant rise at 11% YoY as focus increasingly shifts toward the development of premium high-rise properties.

Homebuyers have been more inclined to acquire ready or near-ready inventory to minimise completion risk seen in the past. However, the heightened demand over the past few quarters has depleted the stock of older inventory, and consumers are now increasingly willing to acquire newly launched properties at relatively lower prices.  

A reducing QTS level depicts a market where demand is gathering momentum. The current QTS level of 6.5 quarters which is significantly better than the 7.1 level a year ago signifies that the overall market traction has improved despite the increase in unsold inventory levels.

While there are instances of developers enticing homebuyers with financing schemes and other freebies such as zero floor rise etc, their ability to move inventory remains strong, especially at the top-end of the market.

Given the steady economic outlook and the improbability of further rate hikes, there are no significant impediments to demand today.

YTD sales till Q3 2023 point toward higher annual sales compared to the record levels seen in 2022, and the increasing volume of enquiries or pre-bookings as we head into the festive season bode well for the market.

I recently sold my property for Rs 5.5 million and the purchase price is Rs 3.5 million.  The market value is Rs 6.5 million.  Which value will be applicable for TDS purposes?  Please clarify.  Arvind, Sharjah.

While buying a house, the buyer is supposed to deduct tax (TDS) at 1% if the purchase price is Rs 5 million or more.  It has to be deducted on the purchase paid or stamp duty value, whichever is higher.

It will be Rs 6.5 million in your case. In the event of failure to deduct, interest at 1% per month will be payable.

I am letting my flat on rent for two years.  Is it mandatory to register in Noida? Gupta, Dubai.

If the lease agreement is more than 11 months, registration of rental agreement in Noida is mandatory.  The process of registration is quite simple.  It protects your legitimate interest in the event of tenant not vacating the premises as it is a registered agreement.