Housing launches up 27 percent in Q1’18 over last quarter

The year 2018 has started on a positive note for the realty sector with residential unit launches making a comeback and recording a 27 per cent increase in Q1 from the previous quarter across top seven cities of India, according to new research. With policy reforms and structural changes now in place, developers are intent on making up for lost ground.

Anarock Property Consultants in its study said that in Q1 2018, sales across the top seven cities also rose by 12 per cent, compared to Q4 2017, indicating that serious home-buyers are back, attracted by the new environment of transparency, accountability and financial discipline. 

“The series of policy reforms and structural changes have transformed the way Indian real estate business is conducted. This has been a definite blessing. The sector is by no means out of the woods yet, but we are now seeing some green shoots of recovery,” says Anuj Puri, chairman, Anarock Property Consultants. “The market has turned end-user friendly and 2018 is bringing new launches that match demand. The days of product mismatch are on their way out.”

The top seven cities recorded new unit launches of around 33,300 in Q1 2018, compared to 26,300 units in Q4 2017.  Chennai added 2,100 units in Q1 2018 compared to 1,000 units  in Q4 2017 — a significant rise of 110%. 

With political stability and elimination of input material issues, the city seems to be back in action. 

Key cities contributing to the Q1 2018 new unit launches included MMR (Mumbai Metropolitan Region), Bengaluru and Kolkata, altogether accounting for 66 per cent of addition. 

Bengaluru added 6,800 units in Q1 2018, a massive quarterly increase of 127 per cent. The other cities in the survey included NCR, Pune and Hyderabad. With more clarity on the back of faster clearances and approvals, new launches surged in Q1 2018. 

Around 49,200 units were sold in Q1 2018 with NCR, MMR, Bengaluru and Pune together accounting for 80 per cent of the sales. Chennai was the only city that recorded a dip in sales at 12  - from 2,600 units in Q4 2017 to 2,300 units in Q1 2018. The increase in launches in the top 7 cities during Q1 2018 when compared to the previous quarter resulted in overall unsold inventory decreasing by a meagre 2% - from 7.27 lakh units in Q4 2017 to 7.11 lakh units by Q1 2018. 

A notable aspect of new launches in Q1 2018 was that the share of Tier I developers increased from 35% in the previous quarter to 40% in the current quarter. Evidently, the expected RERA Effect in terms of boosting organised players is making itself felt.

Residential property prices across the top 7 cities remained largely range-bound in Q1 2018 when compared to the previous quarter. 

The primary reason was the significant unsold stock to the backdrop of limited improvement in demand. Affordable and mid-segment housing dominated, with 74% of unit launches (24,600 units) coming in with price tags under Rs 80 lakh. Supply is being very geared towards end-users, and this is a major shift from Indian real estate’s previous investor/speculator-driven orientation. 

Puri sums up saying that if developers remain focused, add only relevant supply and ensure 100% RERA compliance, the latent housing demand in the country will certainly help catalyse a formal recovery.