Residential sales in Q4 2021 highest in eight and a half years

Mumbai, 24 January 2021: Residential sales increased by 114% Year-on-Year (Y-o-Y) in the fourth quarter of 2021 across India’s seven major metropolitan centres. According to JLL’s Residential Market Update – Q4 2021, released today, sales volume in the fourth quarter (Oct-Dec 2021) was up 70% on pre-pandemic transactions levels of Q1 2020. The market also showed considerable improvement on a quarter-by-quarter basis, with sales growing by 40%, despite more recent pandemic-related challenges.

JLL data shows that 46,750 units sold were sold in the fourth quarter of 2021, representing the highest quarterly sales volumes since Q2 2013. With the onset of the festive season and supported by discounts and incentives offered by the developers plus the low mortgage rates, sales soared in the last quarter of 2021. In the second half of the year, July to December 2021 (H2), sales accounted for a strong 63% share of the overall sales in 2021 across the top seven cities.

Residential sales peak

_{Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis}

Source: Real Estate Intelligence Service (REIS), JLL Research

Bengaluru led the quarterly sales actively, contributing 26% of all residential transactions during the October-December period. Delhi NCR and Pune each accounted for 18% of the sales, while Mumbai represented15% of overall sales. Average quarterly sales in 2021 recorded at 32,000 units have surpassed the quarterly average sales in 2020 (18,000 units) showing strong market recovery.

“Looking at the yearly numbers, the residential sector has made a strong comeback in 2021. The year saw sales increase by 72% year-on-year with around 128,000 units sold in the entire year. It reached nearly 90% of the pre-Covid 2019 sales levels. With good economic conditions and the festive season, developers launched projects quite aggressively. Around 74% of the projects launched in 2021 were in the affordable, lower mid, and mid category as demand is the highest in these segments. Interest rates on housing loans are at an all-time low, thus creating affordable synergies in the market. This is the best time to buy one's own house and thus benefit from not just lower interest rates but better affordability as well,” said Siva Krishnan, Head - Residential, India, JLL.

Sales inching towards pre-Covid levels

_{Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis
Source: Real Estate Intelligence Service (REIS), JLL Research}

“India’s residential sector has witnessed green shoots of recovery and is expected to gain further momentum in 2022 if the third wave is contained. The reduction in home loan rates to a decadal low, coupled with incentives and discounts by the developers, and improved buyer confidence augur well for the residential sector. We do expect some short-term lull in market activity given the rise in Covid cases and restrictions being put in place by state governments. With physical site visits likely to be impacted, sales momentum may see some temporary sluggishness,” said Dr. Samantak Das, Chief Economist, and Head Research & REIS, India, JLL. “We will also keep a close eye on the interest rates, given that US FED measures could result in a hardening of interest rates over the second half of 2022,” he added.

New launches see an uptick

Improving market sentiment on the back of a recovery in the economy has instilled confidence amongst developers as they strategically launched projects across cities to tap into the demand recovery underway. The top 7 cities under consideration witnessed new launches of 45,383 apartment units in Q4 2021, an increase of 38% Q-o-Q. In Q4 2021, most of the launches were witnessed in Pune (19%) followed by Bengaluru and Hyderabad which had a share of 17% each. It is also pertinent to note that the share of established developers remains strong, accounting for most new apartment launches in 2021.

New launches, new dreams

_{Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis
Source: Real Estate Intelligence Service (REIS), JLL Research}

On a yearly basis, new launches in 2021 increased by 47% Y-o-Y with 139,256-unit launches recorded in the year. Amongst the key markets contributing to new launches in 2021 included Hyderabad (26.1%) followed by Pune (17.6%) Mumbai (16.1%) and Bengaluru (16.4%).

_{Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis
Source: Real Estate Intelligence Service (REIS), JLL Research}

Unsold inventory in Q4 2021 declined marginally by 0.3% as the quarterly sales were more than launches. An assessment of years to sell (YTS) shows that the expected time to liquidate the stock has declined from 5.1 years in Q3 2021 to 4.7 years in Q4 2021. This signifies an improvement in the overall supply-demand dynamics.

Unsold inventory down

Outlook:

The increased demand momentum, limited inventory in select segments, and rising input costs are expected to result in a price increase of 5-7% in select residential micro-markets over the next year. The price increase will be limited to select micro-markets. However, the residential price at an overall level will remain mostly stable despite the input cost increase as developers will focus on sales and the completion of ongoing projects.