Affordable Housing Kept The Residential Market Afloat In 2018

As Per Estimates, Average Property Prices Remained Largely Static Across The Top 7 Cities In 2018. At The Pan-India Level It Saw Only 1 Percent Increase.

Impact of regulatory mechanisms such as RERA and GST were felt all along 2018 with all stakeholders — real estate developers, home buyers and real estate brokers — finally accepting the new market realities. Transparency and accountability became the 'new normal' this year but towards the end, the NBFC liquidity crisis precipitated by IL&FS default played spoiled sport and threatened to negate the gains made during the year.

While launch activity recouped from last year, they were still much lower than the high levels seen in 2014 as developers focus on completing existing projects, while complying with RERA rules. Developers increased their focus on the affordable segment supported by government incentives. Ready-to-move-in properties garnered maximum buyer interest.

Prices: Average property prices remained largely static across the top seven cities in 2018. In fact, average property prices at the pan-India level saw only 1 percent increase in 2018 as against the previous year, from Rs 5,491 per sq ft in 2017 to Rs 5,545 per sq ft in 2018, as per data by ANAROCK research.

Litigations: Even though sales and new supply picked up QoQ across the top cities, the issue of stalled projects showed few signs of resolution in 2018. 2018 was a year where consumers, previously held hostage by lack of efficient regulation, finally felt that they are being heard and represented.

Launches: While launch activity has recouped from last year, it was still lower than the high levels seen in 2014 as developers focus on completing existing projects, while complying with RERA rules. Mid segment accounted for 45 percent of the total launches, with the affordable segment close on its heels with a 42 percent share.

Developers increased their focus on the affordable segment aided by government incentives. Affordable housing, backed by a series of government sops during 2018, kept the residential supply momentum ticking. In sharp contrast to earlier years where the ‘affordable’ tag was considered down-market and avoidable, 2018 saw almost every real estate developer – regardless of market footprint and previous category orientations – eager to take a bite out of the affordable housing pie.

In the mid segment, Bengaluru accounted for the highest share (31%), while in the affordable segment, Bengaluru ruled the roost (40%).

As per ANAROCK data, the new launch supply across top 7 cities is estimated to be 1,93,600 units by the end of 2018 – at 1,46,850 units in 2017, this is an increase of 32 percent over the previous year despite all headwinds.

Investments: As per data made available by Cushman & Wakefield, the residential sector raked inflows of Rs 126 billion (including residential platform deals) in year-to-date 2018, registering an increase of over 14 percent year-on-year from the same period last year.

Mumbai accounted for the lion’s share in inflows at 21 percent, followed by Chennai with an 11 percent share. The top 8 cities witnessed a substantial increase of around 35-37 percent in year-to-date residential launches from the corresponding period last year.

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