Top 8 cities home sales down 54%, prices dip in H1 2020: Report
Publish on : 2020-07-18 13:40:25
MUMBAI: The unprecedented disruptions caused by Covid19 outbreak including job losses, salary cuts and concerns over future economic growth has hit the housing market with lower sales and price correction.
In the first half ended June, weighted average prices have declined across most Indian cities with the National Capital Region, Pune and Chennai witnessing the most correction at 5.8%, 5.4% and 5.5% from a year ago, respectively, showed a Knight Frank India report.
The information technology sector driven markets of Hyderabad and Bengaluru, however, witnessed price growth of 6.9% and 3.3% during the period.
After two years of steady demand, the home sales in top eight cities of India declined by a 54% on-year to a decadal low of 59,538 units during the period. Most of the sales activity was concentrated in the first quarter of the year. Around 47% of home sales were registered in properties priced below Rs 50 lakh indicating the continuation of preference for affordable houses.
“The residential real estate sector which was already going through a rough patch has got severely hit by the current crisis. With income uncertainty for the future, demand for housing will take a hit. While the RBI has announced much required liquidity injecting measures and cut in policy interest rate, there is an urgent need for the government to come up with some demand boosting measures for the real estate sector,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Home launches across the top eight cities in India also declined by 46% in the first half of 2020. In the second quarter, launches dipped 90% across top 8 markets as developers were forced to postpone launches across markets due to labour unavailability and credit crunch. Out of key cities, NCR was worst hit with new home launches declining 82% during the first half.
The ongoing Covid19 pandemic and subsequent lockdown has also pushed absorption of commercial real estate in the first half of 2020 across top 8 cities down 37% from a year ago to 17.2 million sq ft, the lowest in the last 10 years, the data showed.
New completions also recorded a 27% drop at 17.3 million sq ft during the period. Despite the low volume of transaction and supply, the weighted average rental for the eight cities reported a 4% growth at Rs 83 per sq ft a month.
Information technology sector dominated with 43% of the overall sector-wise office space transactions. The sharper fall in transactions compared to new supply resulted in a higher vacancy level at 14.1% from 12.7% a year ago, pushing the market in occupiers favour.
“With the economic uncertainties creating significant headwinds, we expect the office space to remain cautious. Most occupiers are expected to hesitate in committing to expansion in the current market scenario and may delay their leasing decisions for later...For the office market, it will be a wait and watch till a more permanent solution to this pandemic is found,” Baijal said.
Demand for offices in key markets including Pune dipped 47%, NCR 45%, Bengaluru 42% and Hyderabad 43% from a year ago. With two large ticket size deals comprising 1.8 million sq ft, Mumbai was relatively less impacted and reported 17% decline in the first half of 2020.