In Q3 FY23, housing sales increased 11% in volume across seven cities, according to ICRA.

NEW DELHI: According to rating agency ICRA, housing sales increased 11% in volume across seven cities in the third quarter of this fiscal year due to stronger demand. “The reported sales in Q3 FY2023 in the top seven cities in India were 149 million square feet (msf), the highest quarterly sales recorded in over ten years,” ICRA said in a statement on Wednesday.

The residential real estate industry showed robust demand in Q3 of FY2023 with 11% year-on-year (YoY) growth in the area sold, it added. The area sold in the first nine months of FY23 climbed to 412 msf against 307 msf in the equivalent period of the previous year.

Post-pandemic, ICRA stated that there has been a gradual shift in the overall segment-wise composition with a rise in the contribution of the luxury and mid segments to the total sales across the top 7 cities – Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR), National Capital Region (NCR), and Pune.

The luxury and mid sectors now account for a larger percentage of total sales, up from 14% and 36%, respectively, in FY20 to 16% and 42%, respectively, from April through December of FY23.
The value of the area sold in the residential real estate industry is anticipated to increase by 8–12% in FY23 and a further 14%–16% in FY24, according to Anupama Reddy, vice president and co-group head of corporate ratings at ICRA.

This is based on a sampling of the top 12 real estate developers who are listed. It’s anticipated that the trend towards bigger spaces, upgrades and a preference for house ownership will continue.
Irrespective Reserve Bank of India’s (RBI) rate increases during the current fiscal year, the interest rates on home loans are still lower than their peak before the creation of Covid, and affordability is still strong, according to the rating agency.

Low inventory overhang and planned launches benefit developers, but there are concerns associated with a downturn in economic growth’s effect on the employment market and an increase in interest rates on affordability, according to Reddy.

The amount of unsold inventory decreased from 923 msf in December 2021 to 839 msf in December 2022. As a result, according to ICRA, the years-to-sell (YTS) for the unsold inventory dropped to 1.5 years, the lowest level in a decade.

The rating agency added that a higher proportion of luxury units in the product mix and the partial pass-on of rising input costs were the main drivers of the average sale price’s 10% YoY increase in Q3 of FY23.

Ashiana Housing, Brigade Enterprises, DLF Ltd, Godrej Properties, Keystone Realtors, Kolte-Patil Developers, Macrotech Developers, Mahindra Lifespaces Developers, Prestige Estate Projects, Puravankara, Sobha Ltd, and Sunteck Realty were among the builders included in ICRA’s sample set.