The housing sector in India reported high growth in 2019 regardless of the headwinds of a slowdown in the economy. As per the report by Knight Frank in India, the residential real estate in the top 8 cities showed an admirable degree of flexibility, with minimal growth of 1% year-on-year (y-o-y) on sales in 2019. Total sales volume increased at 245,861 in 2019 from 242,328 in 2018 as affordability improved, and developers aligned themselves with the needs of homebuyers by decreased ticket-size and unit-size efforts to encourage housing sales. However, flat sales (1 percent y-o-y) grew at 116,576 units during the first half of the year.
In the second half of 2019, 61% of the released ticket sizes were under Rs 50 lakhs, and 81% under Rs 1 crore as real estate developers concentrated on affordable housing and smaller tickets. The data showed that Mumbai had 79,810 houses launched in 2019, Pune with 44,660 and Bengaluru with 33,772 homes. Annual sales across the top eight cities remained stable and increased by a minimum of 1%, as the decline in sales by regulatory and financial interventions continued.
Annual Housing Sales 2019 Across Top Eight Cities
In the second half of 2019, Bengaluru recorded the largest increase in sales at 10%, followed by houses for sale in Hyderabad and Kolkata at 9% each and Chennai at 8%. NCR witnessed a marginal sales increase of 2 percent and a decline of 14 percent and 10 percent respectively in the Mumbai Metropolitan Region and Pune.
In 2019, Hyderabad experienced the highest annual house price increase of 10 percent. It was the only city to record double-digits development. Home prices increased by 6.3%, followed by an NCR growth in Bengaluru is 4.5%, a Kolkata increase in 3.1%, and an Ahmadabad rise in 2%. In residential home prices, Mumbai, Pune and Chennai reported a fall of 2.5%, 3% and 5% respectively.
In the top eight cities in India, new residential units were introduced and grew by 23% to 223,325 in 2019. The new launches growth was higher in the second half of 2019, at 25% to 112,150 units. 61% of launches in the second half of 2019 took place below Rs 50 lakhs, and 81% below Rs 1 crore as developers focused on affordable housing and lower ticket sizes. Also, Mumbai launched 79,810 units, followed by 44,660 units in Pune and 33,772 units in Bengaluru.
In 2019, the unsold inventory in the top 8 markets increased and dropped by 5 percent to 445,836 units. Mumbai had the most extensive inventories of 145,301 units followed by 122,084 units in NCR and 78,414 units in Bengaluru.
Significant challenges were posed to the residential market year-round by economic inflation, such as slower GDP growth, lower industrial production and weak consumer sentiments. Nevertheless, the government and Reserve Bank of India's slew of recent fiscal and monetary incentives seem to have had an adverse effect on the real estate market.
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By: Shailaja K