PropTiger Q2 Report FY'16: 7 Key Takeaways For Home Buyers

Indian real estate developers are meeting the growing demand for affordable homes in India. End users are having it better than ever across major cities. And, the inventory stock is declining. While the summary of Realty Decoder-Q2'FY16, PropTiger Data Lab's report for the second quarter of the financial year 2015-16, gives an overview of real estate in India, here are the seven key trends we identified, which are of great relevance for home buyers:  According to the market seems to be aligning supply towards less than Rs 50-lakh segment. In the nine cities analysed by PropTiger.com, nearly 57 per cent of the new launches in the second quarter was in the affordable segment. Nearly 52 per cent of the sales was in the affordable segment, too.

Here are the seven major takeaways for home buyers from PropTiger Datalab's Q2 report:

End users are driving the demand composition in majority across all major cities, except in Gurgaon and Thane. As real estate markets have been more stable since the Telangana issue, only five per cent of the demand in Hyderabad is from real estate investors. This implies that the quality of sales is now higher in most Indian cities. Hence, price rise is not expected to be as high as seen in some of the investor-driven markets in the past. Anurag Jhanwar, Head-Consulting and Data Insights, PropTiger.com, says that the demand in the market is shifting and aligning towards end users segment. “Today, the end user demand accounts for around 85 per cent of all demand in the market except for the NCR and Mumbai where investor demand, is now around 25-30 per cent.” he added.

Home buyers who need less expensive homes have many options to choose from. 52 per cent of the total unsold inventory is in the affordable segment, and 20 per cent of it is in the mid segment. Nearly 57 of the new launches are in the affordable segment in which apartments costs less than Rs 50 lakh, and 21 per cent of the new launches are in the mid-segment. Much of the unsold inventory in under construction and fully constructed apartments cater to low and mid-income home buyers.

In large cities and emerging real estate destinations, ready-to-move-in apartments are in great demand. Demand for ready-to-move-in apartments in Sohna, Bhiwadi, Gurgaon, and Noida is high, where the inventory in ready-to-move-in segment is less than two per cent. ady-to-move-in apartments have a more difficult time finding buyers in Ahmedabad, Hyderabad, and Chennai where unsold inventory in this segment is 13.5 per cent, 11.7 per cent, and 11.6 per cent, respectively. Pune is the best of the lot where units of unsold inventory and the age of unsold inventory is the lowest.

The fraction of unsold inventory that is more than a year under-construction has been rising in the recent past. In the first quarter of 2014, unsold inventory that was one-two year old was 20 per cent, and unsold inventory that was two-three years old was 10 per cent and unsold inventory older than three years was eight per cent. By Q2'FY16, that went up to 27 per cent, 25 per cent and 20 per cent, respectively. This means that even at the advanced stage of construction, apartments are not easily being sold off. This is not true of ready-to-move-in apartments. The upside is that in three of the four regions where ready-to-move-in apartments are in great demand, many under-construction apartments will soon become ready to move in. In , nine per cent of the unsold inventory is two-three years old and 43 per cent of the inventory is one-two year old. In , 40 per cent of the inventory is two-three years old and eight per cent of it is greater than three years old. In , 34 per cent of the unsold inventory is two-three years old and 22 per cent of it is greater than three years old. In , 27 per cent of the unsold inventory is two-three years old and 33 per cent of it is more than three years old.

Demand for homes is high, even in remote areas like Sohna and Bhiwadi, where ready-to-move-in inventory is the lowest. Bhiwadi and Sohna are followed by Gurgaon and Navi . Fifty two per cent of the unsold inventory is in the affordable segment and 20 per cent of it is in the mid-segment. However, in Gurgaon and Mumbai, much of the unsold inventory is in the luxury segment. For luxury home buyers in -NCR or surrounding regions, Gurgaon offers more options to choose from.

Gurgaon and Mumbai are high-end markets that cater more to investors than to end users. Except in Gurgaon and Mumbai, affordable apartments are in the greatest demand. But, in Gurgaon and Mumbai, there are enough mid-segment apartments that are priced in the range of Rs 50-75 lakh.

Home buyers who invested in Sohna, Yamuna Expressway and Bengaluru benefited the most from price appreciation. Noida and Bhiwadi are the only two regions where prices have declined year on year. However, the price appreciation was modest in all cities.