Affordable housing demand drives real estate recovery

Among the top 8 cities, Bengaluru witnessed 74% growth, while Hyderabad recorded the highest 197% growth in the Sept quarter

Driven by strong demand for affordable housing units, priced up to Rs 45 lakh, the residential real estate sector has witnessed a decent recovery during the September quarter.

Housing sales on a quarter on quarter basis have gone up 85% during the third quarter of the calendar year 2020 at 35,132 units. The share of affordable housing in the quarterly sales stood at 45% in the top eight cities including Bengaluru, according to data compiled by online real estate brokerage firm PropTiger.com.

Among the top 8 cities, Bengaluru witnessed 74% growth, while Hyderabad recorded the highest 197% growth during the quarter. It was followed by Ahmedabad and NCR. However, on a year-on-year basis, all the cities recorded contraction in sales.

New supply grew almost 60% on a Q-o-Q basis with 43% of the 19,865 units launched coming in through the affordable housing segment. However, on a YoY basis, launches showed a significant downward trend declining by 66%, the PropTiger.com research showed.

"Green shoots are visible pointing to the start of a recovery in residential real estate, which is evident in improvement in new launches and sales on a QoQ basis. The lower home loans, which are at a 15-year low, have encouraged buyers to return to the market," Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com said.

In Bengaluru, Varthur micro-market witnessed robust sales and was among the top 10 key movers of residential demand in the third quarter. Overall, two localities each from the Mumbai Metropolitan Region and the National Capital Region were part of the top-10 list in terms of sales.

New supply in Bengaluru dipped by a sharp 72% as compared to the previous year, with around 2,086 units launched in Q3 2020. A majority (47%) of the new supply in the third quarter was recorded in the less than Rs 45 lakh price bracket, followed by 33% in the Rs 45-75 lakh range.

On the demand side, although the demand somewhat picked up from the lows of the previous quarter with 4,825 units sold, Bengaluru registered a 50% YoY decline in demand in Q3 2020. Interestingly, nearly 42% of the sales were concentrated in the Rs 45 lakh to Rs 75 lakh price brackets.