12 Sep , 2022 By : Monika Singh
High interest rates, coupled with rising input costs leading to higher unit prices, have started affecting residential sales. In the upcoming festive season, the sales are expected to be the same as last year. However, developers remain optimistic and expect sales to rise and the demand momentum to sustain beyond the festive season.
Residential sales declined across all metros, with the sharpest fall of 24% quarter-on-quarter coming in from Chennai, which recorded 3,810 units sold during the April-June period compared with 4,985 units in the preceding quarter of January-March. This was followed by Kolkata which witnessed a drop of 20% during the same period. Sales in the Mumbai Metropolitan Region (MMR) also declined by 15%, while the National Capital Region (NCR) saw sales falling by 19%, according to data from Anarock Research.
The top seven cities saw housing sales moderate by 15% — from around 99,550 units in January-March to nearly 84,930 units in April-June. As far as outlook is concerned, Anarock has projected that around 91,000 units were sold during the festive quarter of October-December 2021, and this year too, sales are expected to be around the same level.
However, developers remain unfazed. Irfan Razack, chairman and MD, Prestige Group, told FE: “At Prestige there is no data to suggest any let-up in the momentum of sales across the geographies the company has its operations. As regards the cost of inputs the same is being more than adequately compensated with the strengthening of prices over the life cycle of specific development sales. Our bias is largely towards addressing the mid market where demand is resilient largely unfulfilled.”
Arvind Subramanian, MD and CEO, Mahindra Lifespaces, also maintained that demand is strong despite the gradual rise in prices of houses. “As the country enters the festive season this year, thriving real estate markets continue to experience end user-driven demand. As Shradh ends, demand is expected to remain strong and will only gain momentum,” he said.
Viswa Desu Pratap, chief sales officer, Brigade Group, said: “From a macro perspective, sales have been good, despite increase in material costs, higher interest rates and other factors. We are witnessing a trend of more serious buyers visiting our project locations and closing sales. We expect good sales growth during the festive season, and to this end we are planning a few new launches across the city.”
Another Bengaluru-based developer, Puravankara, also remains optimistic. “Considering the favourable market forces, buoyant customer sentiment and macroeconomic factors like growing income levels, we look forward to a successful festive season,” Abhishek Kapoor, CEO, Puravankara, said. “We have introduced several measures to encourage more buyers to enter the market. For instance, we will offer a reduced home loan rate of 3.99% and a 2-5% rebate on prices for a limited period,” he added.
Explaining the varying sentiment between last year during the festive season and this time, Anuj Puri, chairman, Anarock Group, told FE: “Last year saw considerable pent-up housing demand and interest rates were their lowest best at the time. Most developers, including the large and listed players, were sweetening deals by doling out various offers and discounts to cash in on the housing demand. While housing demand currently remains strong, home loan rates and developer prices have increased in the wake of 140 basis points repo rate hike by the RBI and input costs, respectively this year.”
Anshuman Magazine, chairman & CEO (India, South-East Asia, Middle East & Africa), CBRE Property, said despite the price increases, positive consumer sentiment will sustain festive season demand. “We estimate that continued inflation and increasing cost of financing may impact stakeholder sentiments in the near term, but the sector’s overall health will be robust owing to positive homebuyer sentiments,” he said.