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The housing market in southern India is shows some sign of revival in the December quarter with an improvement in the new launches and sales.

According to PropTiger, Hyderabad, Bengaluru and Chennai together had 43% share in national launchers during the December quarter, while they contributed 29% to the national sales numbers during the period.

New launches in Q4, 2020

Home sales in Q4, 2020

Source: PropTiger

“The affordable housing segment has been the leading segment in Bengaluru, Hyderabad and Chennai. Hyderabad has displayed price growth at a time when the opposite trend is being seen in most other markets. Hyderabad’s real estate market is benefiting from its new and upcoming world-class infrastructure projects and the quality of life,” says Mani Rangarajan, Group COO, Proptiger.com.

In Bengaluru, the affordable housing segment (units priced up to Rs 45 lakh) contributed 27% and 25% to launch and sales numbers, respectively. In Chennai, this segment contributed 38% and 37% to launch and sales numbers, respectively. In Hyderabad, this segment contributed 35% and 17% to launch and sales numbers, respectively.

At the centre stage of the office activity, localities of Hyderabad west had the highest share in both, supply and demand. In Chennai, on the other hand, Mogappair and Perumbakkam in Chennai west and Sholinganallur on OMR emerged on top in terms of sales. In Bengaluru, while the demand was concentrated in localities such as Varthur, Whitefield, Begur, Budigere and Krishanarajapuram, the new supply was seen in localities of north Bengaluru such as Budigere Cross, Kogilu and Yelahanka.

Hyderabad has the lowest inventory overhang nationally

Even though Chennai had the lowest unsold stock as on December 31, 2020, Hyderabad has the lowest inventory overhang nationally, at 29 months, Proptiger said.

Inventory overhang is the estimated period developers would take to sell the existing stock, keeping in view the current sales velocity.

Unsold stock: City-wise break-up

Inventory overhang has increased in all these cities since 2019. At the end of December 2019, the inventory overhang was 25 months in Bengaluru, 26 months in Chennai and 13 months in Hyderabad.

Price growth continues in Hyderabad despite demand slowdown

Despite tremendous pressure because of a demand slowdown nationally, Hyderabad continues to defy the trend to witness consistent price growth. “In Q4, too, the average rate of newly-launched projects in this pharmaceutical hub increased 5% year-on-year.” Proptiger said.

Average price in southern cities

Source: PropTiger

Outlook 2021

Commenting on the year 2020, Vivek Rathi, Director Research at Knight Frank India said, “Given the unannounced Covid-19 pandemic and associated challenges, the year gone by was a tough year even for the southern cities, which have otherwise shown resilience over the last decade. Sales declined in Bengaluru, Chennai, and Hyderabad by 51%, 49% and 38%, respectively.”

Rathi added that the inflection point came when the gradual unlocking of cities in the second half of 2020 coupled with improved demand conditions brought by relatively affordable prices, multi decade low home loan interest rate and improving economic activity led to a sharp improvement in sales momentum, which is likely to continue in 2021 with the additional factor of pandemic resolution.