Weighted average price across these markets also exhibited a marginal decline of 1% from a year ago. Prices dropped in 14 cities, while nine cities recorded increase. Among tier I cities, Hyderabad is the only city to show a significant increase in price of 5%, showed data from Liases Foras Real Estate Ratings & Research.
“Tier II cities were not as severely affected by the liquidity crunch in the market and the overall economic slowdown as the metros. These markets were growing at a faster pace as compared to the tier I cities over the last two years,” said Pankaj Kapoor, MD, Liases Foras. “The September quarter, however, has shown sign of stress on tier II markets too.”
According to him, while tier I cities had shown a growth of 5% in 2018-19, tier II markets had shown a 16% growth during this period.
Interestingly, 57% of the sales of September quarter was contributed by sub-Rs 50 lakh segment and also maximum number of new launches were in Rs 30 lakh – Rs 50 lakh bracket accounting for almost one-third (31%) of total units launched during the quarter. This reinforced the fact that lower income and affordable category units are leading the sales as well as launches.
The share of tier 2 cities in the total primary sales has increased in the last five years to 25% in 2018-19 from 16% in 2013-14.
Sales numbers in these smaller cities like Surat, Bhopal, Nashik, Jaipur and Chandigarh also add up from independent self-construction houses, contractor built units, complexes and under the government schemes such as Pradhan Mantri Awas Yojna (PMAY).
During the September quarter, housing sales across 35 cities declined marginally by 2% although 20 out of these cities witnessed a growth as against a year ago period. Among the top 15 cities, upward movement was noticed in Nashik with 25% rise in sales, Jaipur 22%, Kolkata 11%, Hyderabad 10%, Ahmedabad 4%, Bangalore 2% and Outer MMR 2%.
The unsold stock in 35 cities increased 5% from a year ago and this increase can be attributed to the high new launches in the previous two quarters ending March and June taking current unsold across 35 cities stands to 13.10 lakh units.
According to realty developers, the sector needs government support on demand side apart from the proactive steps initiated already to stop sluggishness spreading to even smaller cities.
“It started with big cities, but now moving into other markets too. With macro-economic indicators like lower industrial output and job losses is making things difficult in tier-II markets too. On demand side, the government needs to bring in rational change to ensure buyers’ confidence improves,” said Satish Magar, president of Confederation of Real Estate Developers Association of India (CREDAI).
In a measure aimed at reviving stalled housing projects across the country, the government has recently decided to set up Rs 25,000-crore alternative investment fund. The move is expected to help close to 1600 projects with 4.58 lakh residential units and also prop up the economy.
In tier I cities, overall sales declined by 4% from a year ago. Of these markets, sales in National Capital Region (NCR) witnessed maximum year-on-year decline of 15% on followed by Chennai, Mumbai Metropolitan Region (MMR) and Pune witnessing 9%, 7% and 4% decline, respectively. Upward movement in sales was observed in Kolkata with 11% rise, Hyderabad 10%, Ahmedabad 4% and Bangalore 2%.
Slowing sales momentum has resulted in 7% on-year rise in overall inventory levels in tier I cities led by Pune, MMR, Chennai and NCR where it saw by 23%, 16%, 13% and 10% rise respectively. Kolkata and Ahmedabad witnessed a drop of 17% and 7%, respectively.
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