March 12, 2023
Housing Sales Volume grows 11% across 7 cities in Q3
According to rating agency ICRA, housing sales in volume terms increased 11% in the third quarter of this fiscal year across seven cities due to increased demand. "The reported sales in Q3 FY2023 in the top seven cities in India are the highest quarterly sales recorded in over ten years," ICRA said.
The residential real estate sector saw strong demand in Q3 of FY2023, with an 11% year-on-year (YoY) increase in area sold. The area sold in the first nine months of FY23 increased to 412 msf, up from 307 msf in the same period last year.
ICRA observed a gradual shift in the overall segment-wise composition following the pandemic, with a rise in the share of the luxury and mid segments to overall sales across the top seven cities — Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR), National Capital Region (NCR), and Pune.
The contribution of the luxury and mid segments to overall sales has increased from 14% and 36%, respectively, in FY20 to 16% and 42%, respectively, in April-December of FY23.
"The value of the area sold in the residential real estate sector is expected to grow by 8-12% in FY23 and a further 14-16% in FY24," said Anupama Reddy, Vice President and Co-Group Head - Corporate Ratings at ICRA.
Based on a sample of the top 12 listed real estate developers. The preference for larger spaces/upgrades and home ownership is expected to continue. Despite the RBI's rate hikes during the current fiscal year, home loan interest rates are still lower than the peak pre-Covid interest rates, and affordability remains healthy, according to the rating agency.
"While low inventory overhang and calibrated launches benefit developers, the impact of a slowing job market and higher interest rates on affordability pose risks," Reddy said.
Unsold inventory levels fell to 839 msf in December 2022, down from 923 msf in December 2021. As a result, the years-to-sell (YTS) for unsold inventory fell to a decade low of 1.5 years, according to ICRA. Furthermore, the rating agency stated that the average sale price increased by 10% year on year in Q3 of FY23, owing to the partial pass-through of increased input costs as well as a change in product mix with a higher share of luxury units.