💸Price Analysis

Home sales, residential construction have declined steeply, as the economy has suffered its worst decline on record due to the coronavirus pandemic, and except for Hyderabad and Ahmedabad, real house prices have been falling in major cities.

During the year to Q2 2020:

• Hyderabad witnessed the highest y-o-y price increase at 7% (1.7% in real terms), to an average of INR 5,505 (US$75) per sq. m.

• In Ahmedabad, prices rose by 6% y-o-y to an average of INR 3,104 (US$42) per sq. m. (up 0.8% in real terms)

• In Kolkata, prices rose by 3% y-o-y to INR 4,178 (US$57) per sq. m. (down 2.1% in real terms)

• In Bangalore, prices rose by 3% y-o-y to INR 5,299 (US$72) per sq. m. (down 2.1% in real terms)

• In Pune, prices rose by 2% y-o-y to INR 4,951 (US$68) per sq. m. (down 3% in real terms)

• In Mumbai Metropolitan Region (MMR), the average house price rose by 1% y-o-y to INR 9,490 (US$130) per sq. m. (down 4% in real terms)

• In Delhi NCR, prices increased 1% y-o-y to INR 4,293 (US$59) per sq. m. (down 4% in real terms)

• In Chennai, prices were steady at an average of INR 5,138 (US$70) per sq. m. (down 4.9% in real terms)

The All-India house price index rose by 3.92% y-o-y during Q1 2020, slightly up from the prior year’s 3.64% growth, according to the Reserve Bank of India (RBI), the country’s central bank. However, when adjusted for inflation, nationwide house prices actually dropped 1.21%. On a quarterly basis, house prices fell by 0.25% (-0.96% inflation-adjusted).

Residential construction activity is falling. In Q2 2020, only 12,564 housing units were launched, down by a huge 80.7% from a year earlier. Total launches in H1 2020 were down almost 65% from the same period last year.

Demand is depressed. In Q2 2020, home sales in India’s 8 major markets (including Ahmedabad, Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata, MMR, and Pune) plunged by a whopping 79% to 19,038 units compared to 92,764 units sold in Q2 2019. For the first half of this year, sales dropped 52% from a year earlier.

India’s economy shrank by 23.9% in Q2 2020 from a year earlier, in sharp contrast to y-o-y growth of 3.1% in Q1 2020 and the biggest contraction on record, after lockdown was imposed in late March and extended several times. Fitch Ratings expects GDP to contract by 10.5% in FY21, double the 5% fall it forecast in June.

In Q2 2020, home sales in India’s 8 major markets plunged by 79% to 19,038 units compared to 92,764 units sold in Q2 2019. For the first half of this year, sales dropped 52% from a year earlier.

All of India’s 8 major cities saw plunging sales during the year to Q2 2020.

• In Ahmedabad, sales of residential properties dropped by over 80% y-o-y to only 1,200 units

• In Bangalore, sales registered a decline of 73% y-o-y to 2,776 units

• In Chennai, sales fell by 70% y-o-y to 1,312 units

• In Hyderabad, sales dropped 86% y-o-y to just 1,100 units

• In Kolkata, sales dropped 75% y-o-y to over 1,000 units

• In Mumbai, sales plunged 85% y-o-y to just 4,560 units

• In Delhi NCR, total sales fell by a huge 81% to only 1,886 units

• In Pune, sales plummeted by 74% y-o-y to only 4,900 units