Housing sales drop 15% in top 7 cities in Q2 2022 amid price and lending rate hikes

In a major fallout of increased property prices and lending rate hikes, the top 7 cities saw housing sales moderate by 15% from approx. 99,550 units in Q1 2022 to approx. 84,930 units in Q2 2022, finds the latest ANAROCK Research data.
While the sales have seen some impact, some markets have continued to witness relatively good momentum. Cities like Bengaluru, Hyderabad, Chennai and Pune saw a downward trend, while Mumbai and NCR led the residential absorption.

MMR recorded the highest sales of approx. 25,785 units in Q2 2022, followed by NCR with approx. 15,340 units.

“Inflationary pressures on input costs compelled developers to increase property prices in the past few months, and RBI unleashed two rate hikes that swelled up home loan interest rates. These two factors combined to hike the overall property acquisition cost for homebuyers, leading to a dip in housing sales. The fact that after two years, there was no new Covid-19 wave to disrupt family travel plans during the school vacation months (April to June) could also have impacted sales,” said Anuj Puri, Chairman - ANAROCK Group.

New launches across top five markets also saw downward trend. Developers restricted new supply to approx. 82,150 units in Q2 2022 against 89,150 units in Q1 2022 an 8% decline in the period. MMR and Pune were the only markets to see new launches increase by 26% and 14% q-o-q, respectively.

The key cities contributing to new unit launches in Q2 2022 were MMR (Mumbai Metropolitan Region), Hyderabad, Pune, and Bengaluru, which together accounted for 91% of the new supply addition. Only MMR and Pune saw increased new launches.

“ Despite the recent rate hike announcements by RBI which could possibly increase home loans by 5% to 6%, we have seen that it has had minimal impact on demand, especially in the Southern Markets which is driven by IT and ITeS sectors. We expect buyers’ sentiment to remain positive. However further rate hikes could have an impact on demand,” said Atul Goyal, CFO, Brigade Enterprises Ltd.

However, residential property prices across the top 7 cities saw a quarterly increase of 2-3% in Q2 2022. Annually, prices have risen by between 4 and 7%, primarily due to increased input costs and good demand post-Covid-19. Inventory also remained more or less stable at 6.25 lakh units in Q2 2022 against 6.28 lakh units in Q1 2022, due to low quarterly sales.