PropTiger Q2 Report FY'16: Key Messages

The second quarter of financial year 2016 (Q2'16) brought in a mix of good and bad news for the real estate sector.

PropGuide decodes seven top trends from PropTiger.com's Realty Decoder-Q2'FY16 performance report, compiled by Datalabs division:

57 per cent of new launches below Rs 50 lakh

The real estate market is warming up to middle-class home buyers. According to the report, around 57 per cent of the new home launches in the quarter were priced below Rs 50 lakh. If the trend continues, there would be more number of cheaper but smaller homes.

Inventory going down

In spite of slower sales and fewer launches, not all news are bad for the sector and developers, in specific. The total outstanding inventory is reducing on a quarterly basis by around 5,000 to 12,000 per quarter. Sales are slow but they are taking place.

Launches are falling faster than fall in sales

In spite of the silver lining, the number of units launched and sold have fallen as compared to Q1'FY16. While the number of units launched in the top cities fell to 37,000 from 51,000 in the previous quarter, sales fell slower by 14 per cent to 49,000 from 57,000.

Good news for home buyers

With exception of Gurgaon and Thane, all other markets, at the end of Q2'FY16, had under 20 per cent of investor interest. It means that home prices are not likely to go up irrationally. Stability might return to the market as it will only be end-users who will be interested. Hyderabad has the lowest investor base at 5 per cent.

Home prices appreciate, but slowly

The property prices on an average have increased, but the percentage of increase is under 5 per cent. The growth of property prices in Pune was flat and slight negative. So, home buyers will neither see a drastic rise or drop in property prices any time soon

Share of new launches coming down

The share of new units launched in total units sold have been progressively coming down. Two years back, the share of new launches stood at around 45 per cent, which has now come down to 28 per cent in Q2'FY16. New units launched, in general, have been falling in almost all the cities, expect Hyderabad. The second quarter had the lowest number of launches in the last ten quarters. The new units launched fell by 51 per cent compared to Q2'FY15, and is currently stands at 36,774 units. 

Unsold inventory highest in top Mumbai, Noida and Bengaluru

The number of units up for sale in the market, however, is high due to large unsold inventory. The number of unsold units have been over 3,00,000 in the top nine cities. The total unsold inventory in Mumbai is at around 1,50,000 units. Bengaluru was ahead of Noida in large unsold units, which is a little over 1,00,000. Noida has around 99,000 unsold units. The lowest number of unsold unit is in Ahmedabad.