Government sops boost housing sales by 12 per cent in Q1 2019

Defying previous election year trends when sales and new launches remained muted during this period, Q1 2019 saw both housing sales and new supply rise due to multiple Government sops in the first three months of 2019.
Government sops boost housing sales by 12 per cent in Q1 2019

Chennai

Anarock Property Consultants’ data shows that housing sales rose by 12% and new residential supply by 27% q-o-q due to sops in the interim budget, GST rate cuts and lowering of home loan rates post RBI’s recent repo rate cut.
Of the total new supply, affordable housing saw the maximum share at 44%. However, overall unsold inventory across the top cities saw a meagre 1% decline in Q1 2019 over the previous quarter. Unsold housing stock stands at 6.65 lakh units as of Q1 2019.
Pune and MMR were the top performers with new housing supply increasing by 160% and 62% respectively. Housing sales in these two leading Western region cities saw a maximum increase in the quarter by 24% and 19% respectively.
“While we anticipated a negative spill-over impact of the NBFC crisis in the first quarter of 2019, housing sales and new supply assumed an upward trajectory,” says Anuj Puri, Chairman – Anarock Property Consultants. “The sector is currently riding on a new wave of optimism following the triple benefits it received from the Government in the first three months of 2019. These sops have not only increased homebuyers’ sentiments but will also boost the confidence of builders and long-term investors.”
Q1 2019 New Launch Overview:
 The top 7 cities recorded new unit launches of around 70,490 units in Q1 2019 (as opposed to 55,600 units in Q4 2018) - a quarterly increase of 27%
 Key cities contributing to Q1 2019 new unit launches included Mumbai Metropolitan Region (MMR), Pune, Bengaluru and NCR, together accounting for 87% of new supply
 Chennai added 3,170 units in Q1 2019 - a decrease of 19% over the previous quarter Bengaluru added 9,070 units in Q1 2019 - a quarterly decrease of 22%. Approx. 64% new supply was added in sub Rs 80 lakh price bracket.
 Hyderabad added fresh supply of 4,850 units in Q1 2019 (compared to 3,940 units in Q4 2018), increasing by 23%
The ripple effect of the NBFC crisis Q4 2018, coupled with the usually slow pre-election sentiment, could have played spoilsport for both new launches and housing sales in Q1 2019. However, the Government’s various interventions have had not only a buffering but a boosting effect. Working closely with the RBI, it has been successful in curtailing the liquidity crisis in the sector.
On a yearly basis, new launches across the top 7 cities together saw a 91% jump in Q1 2019 against the corresponding period in 2018. Similarly, housing sales saw a yearly increase of over 58% in the top cities.
Q1 2019 Overall Sales Overview:
 Around 78,520 units were sold in Q1 2019 with NCR, MMR, Bengaluru and Pune together accounting for 84% of the sales.
 Sales in Bengaluru and Chennai increased by 5% and 4% respectively over the previous quarter and were recorded at 15,580 units and 3,430 units respectively
Despite the increase in launches and overall absorption in the top 7 cities during Q1 2019 over the previous quarter, overall unsold inventory decreased by a meagre 1% - from 6.73 lakh units in Q4 2018 to 6.65 lakh units by Q1 2019. The yearly decline was over 7% - from 7.13 lakh units in Q1 2018 to 6.65 lakh units in Q1 2019. Bengaluru witnessed the highest reduction in unsold inventory by 27% from Q1 2018 to Q1 2019.
Pricing Trends
 New supply across top 7 cities up by 27% q-o-q – from 55,600 units in Q4 2018 to 70,490 units this quarter; defies conventional election period trends
 New affordable housing supply sees over 47% q-o-q jump – from 20,800 units in Q4 2018 to 30,750 units this quarter 
 Annual housing sales rise 58%, new launches up by 91% across the top 7 cities Average residential prices across the top cities remained stagnant in Q1 2019 when compared to the previous quarter - except in Bengaluru and Hyderabad, where the average property prices increased by 1% each over the previous quarter and by 2% in a year.
All in all, the realty sector looks all geared up in 2019. The slash in GST rates to 5% for premium homes and 1% for affordable homes without ITC gives the beleaguered realty sector the much-needed breathing room and will certainly help in maintaining forward momentum over the next three quarters of 2019.
The booster shot given by the Government by changing the budget-specific definition of affordable housing and extending it to <Rs 45 lakh has resulted in more inventory from the premium budget henceforth being included in the affordable segment category - a major benefit to buyers.

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