Emerging headwinds could pose challenge for housing sector

NEW DELHI: Even as the sales in the housing sector have witnessed growth in the first quarter of the current year, emerging headwinds could pose a challenge in the short-term.

Nearly 1,13,770 units sold in Q1 2023 across the top 7 cities, said the latest ANAROCK Research data.

This is a 14 per cent yearly rise against approximately 99,550 units sold back in Q1 2022.

The two leading western markets -- Mumbai Metropolitan Region and Pune accounted for over 48 per cent of the total sales in the top 7 cities, with Pune witnessing an over 42 per cent yearly jump.

New launches across the top 7 cities also breached the one lakh mark and witnessed 23 per cent yearly rise - from 89,140 units in Q1 2022 to over 1,09,570 units in Q1 2023.

Interestingly, Mumbai Metropolitan Region and Pune again saw the maximum new supply, accounting for 52 per cent of the total new launches across the top 7 cities.

Individually, the two cities saw 58 per cent and 34 per cent yearly increases in their new supply, respectively.

Despite spiralling new launches in this and the previous quarter, the available inventory in the top seven cities remained almost similar at about 6.27 lakh units by Q1 2023-end. On a q-o-q basis, unsold stock saw a 1 per cent dip across the top 7 cities.

Among the top cities, NCR saw the highest decline in its unsold stock in Q1 2023 - by 22 per cent.

Anuj Puri, Chairman, ANAROCK Group, said: "The residential market's winning streak continued in the first quarter of 2023 with housing sales in top cities breaching the previous high of Q1 2022. The quarter has recorded the highest ever sales in the last decade amid significant rise in demand for high-ticket priced homes (>Rs 1.5 crore)."

"However, emerging headwinds could pose a challenge in the short-term," said Puri.

"Persistent inflation concerns along with another possible rate hike by the RBI in the near future could dent the housing market's growth trajectory in the upcoming two quarters. Once the dust of the ongoing economic disruptions settles, it is likely to regain again, backed by rise in homeownership sentiment," he added.

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd said that the housing sector is experiencing strong sales due to increased affordability over the years.

"We anticipate closing this fiscal year with the highest number of housing units sold, since our inception. Despite a rise in home loan interest rates, there has been minimal impact on demand nationwide. We anticipate that the demand in the housing sector will continue for at least a few more years," he added.

The top seven cities recorded new launches of around 1,09,570 units in Q1 2023 against 89,140 units in Q1 2022, increasing by 23 per cent over the previous year's corresponding period.

The key cities contributing to new launches in Q1 2023 included Mumbai Metropolitan Region, Hyderabad, Pune, and Bengaluru, together accounting for 77 per cent supply addition.

Average residential property prices across the top seven cities increased in the range of 6-9 per cent in Q1 2023 when compared to Q1 2022, mainly due to increase in the prices of construction raw materials and overall rise in demand.

Mumbai Metropolitan Region and Bengaluru recorded the highest 9 per cent annual jump.