Affordable Homes Continue To Attract Buyers

Affordable homes – those priced around Rs 25 lakh to Rs 40 lakh – continued to be the top choice of the home buyers in the second quarter ended September 30, 2016. As many as 29,000 units of affordable houses were launched by developers across the top nine cities in the country. The affordable homes continued to dominate the new launched residential projects across these cities, say various reports on the sector by real estate advisers and consultancy firms.

According to PropTiger, an online real estate advisory firm, home launches during the July-September period this year witnessed a double digit growth pegged at around 14 per cent whereas the sales of housing units remain stagnant compared to the same period, a year ago figures. Around 55,000 units of residential houses were sold in the second quarter of which a lion’s share was of units that were launched over one year back. “Consumers are clearly opting for units that are finished or closed to getting completed. Visible proof of construction on-site and its progress is one of the factors leading to sales today,” said a Noida-based real estate agent.

Another good news for the sector is an indication of increase in home prices after witnessing stagnations for over half-dozen quarters consecutively. According to the latest quarterly House Price Index (HPI) report by the Reserve Bank of India, the home prices witnessed an increase of 7.3 per cent in the April to June quarter indicating an increase in the buying-selling activity in the top cities. Hyderabad witnessed the highest increase in home prices of around 11 per cent.

One report on the residential sector indicates that around 47,000 new residential units were launched in Q2 FY17, against 41,000 units in the preceding quarter. But the inventory overhang (delay in completing of units) during the quarter remained unchanged at 35 months. However, unsold inventory in all the cities, barring Ahmedabad, Kolkata and Pune, witnessed a decline, the report suggests.

“The increased focus of developers on execution and new launches mostly happening with prior approvals, are expected to bring fence-sitters into the market," said Anurag Jhanwar, business head, consulting and data insights, PropTiger.com and Makaan.com.

Mumbai, Pune and Bengaluru witnessed the maximum home sales with Mumbai market contributing the highest home sales in the second quarter, the report indicated.

Increase in Home Prices
As per the RBI report, "All-India HPI (base 2010-11=100) has sequentially increased by 5.5 per cent to 231.1 per cent in Q1 of 2016-17 from 219.1 in Q4 of 2015-16. All cities witnessed HPI increase in Q1 of 2016-17," RBI said in a statement. The index recorded annual increase of 7.3 per cent in the first quarter of 2016-17 after moderation over four consecutive quarters from 17.5 per cent in the fourth quarter of 2014-15 to 3.3 per cent in the fourth quarter of 2015-16.

On an annual basis, Chennai witnessed maximum increase of 23.9 in the first quarter of 2016-17, the report said. On a sequential basis, Kochi recorded highest increase in housing price index of 17.6 per cent, it said.