In their latest report, Knight Frank India noted that the residential sector has recorded a sale of 156,640 units in H1 2023, marginally lower by 1% YoY (January – June 2023) but 1.7% higher compared to H2 2022. While low-interest rates and comparatively low residential prices sparked the revival in demand, the residential sales level sustained even as interest rates rose.
The new launches stood at 1,73,364 units, up 8% YoY. H1 saw a growth for the premium residential segment, as it witnessed a rise across cities in H1 2023. The demand for mid-segment homes eclipsed the affordable segment in H1. While the market is carrying more inventory, the consistently high sales volumes in H1 2023 have pushed down the Quarters to Sell (QTS) level from 7.8 to 6.7 quarters during this period.
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Key highlights;
- Residential units above Rs 1 crore account for nearly 30% market share of sales vs 25% in H1 2022
- H1 witnessed second-highest half-yearly residential sales volume in 9.5 years
- NCR sales at a 10-year high level
- Residential sales grew most in Hyderabad at 5% YoY, Mumbai and Bengaluru saw a fall of 8% and 2% YoY respectively
- The volume of new residential launches grew 8% YoY to 0.17 mn units in H1 2023
- The residential segment registered sales of 0.16 mn units in H1 2023Hyderabad residential prices grew by 10% YoY, highest among all markets
- Quarter to sales for Pune is at the lowest across all markets at 4.3 quarters
All India Residential Update: H1 2023 (January – June 2023)
H1 2023 posted sales of 1,56,640 units, 1% lower YoY. The demand remained consistently high in H1 2023 even as annual growth slipped marginally. The sales volume was the second highest in almost 10 years. The industry continues to consolidate with residential developments steadily shifting into the hands of stronger developers who have been able to weather the economic storm created by the pandemic.
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The volume scorecard for H1 has been a mixed bag. Hyderabad, NCR, Kolkata, and Chennai saw positive growth, whereas Bengaluru and Mumbai witnessed sales that are near decade high. New launches were steady across key markets. Pune and Bengaluru saw double-digit growth in terms of the number of new launches.
Mumbai’s sales volume of 40,798 home units accounted for 26% of the total sales among the top 8 markets, the highest among all markets. NCR, Bengaluru, and Pune stood second, third, and fourth respectively in terms of sales witnessed in H1. In terms of annual percentage increment, Hyderabad witnessed an increase of 5% YoY with a sales volume of 15,355 units.
QTS measures the number of quarters required to exhaust the unsold inventory, which has reduced for most markets. It is the lowest for Pune city, followed by Bengaluru and Chennai. Generally, a lower QTS level denotes greater sales traction and better market health.
The share of sales of homes costing Rs 10 mn (Rs 1 Crore) and above grew from 25% of sales in H1 2022 to 30% in H1 2023. This can be attributed to the rising prices and the homebuyers’ need to upgrade to larger living spaces with better amenities.
The biggest development was the share of homes in the Rs 5-10 mn (Rs 50 lakhs – Rs 1 Crore) eclipsing that of the affordable home segment costing below Rs 50 lakh. The percentage of sales in the mid-segment category grew from 35% in H1 2022 to 38% in H1 2023. And the affordable segment – homes of value below Rs 50 lakh saw a dip from 40% in H1 2022 to 32% in H1 2023. The market is evenly balanced between the three segments with the share of sales now ranging between 30-38%.
Prices increased across all markets in the range of 2% – 10% YoY with some of the larger volume markets of Mumbai (6%), Bengaluru (5%), and NCR (5%) registering notable growths. This also marks H1 2023 as a period in which prices have grown in YoY terms across all markets for the second time since H2 2015.
Shishir Baijal, chairman and MD, Knight Frank India, said, “The main drivers of market momentum are mid and premium segment homebuyers, who possess both the desire and financial capability to purchase a home. On the other hand, the fallout of headwinds has been the affordable housing segment which has seen deceleration in its volume as well as market share decline significantly.”
“For the mid and premium segment, it is interesting to note that demand remained robust despite the increase in home loan rates during the first few months of the year, which highlights the enduring strength of the market. With a promising pipeline of new project launches and high consumer enthusiasm, we anticipate that market traction will continue throughout the remainder of the year.”
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