Industry
Mint Primer Will Diwali light up festival season home sales?
Summary
- Home sales and launches have hit a slump, but can the festival season turn things around? With sales down 18% and launches dropping 11%, developers are betting on aggressive launches and discounts. Is this slowdown just a blip, or a sign of deeper trouble?
After a winning streak, home sales and project launches have gone tepid. All eyes are now on the coming festive season, considered the best-performing period for the property sector, which could revive the momentum in sales and launches. Mint explains:
What kind of dip have sales seen?
Residential sales rose steadily after the pandemic, but reached a peak in 2023 across all the major cities. Sales cooled down for the first time in two years in the April-June period, and then dropped further in the September-ended quarter. On a year-on-year basis, home sales dropped by 18% in the July-September period in the top property markets, with the exception of the National Capital Region (NCR), as per PropEquity data.
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The decline is partly due to an all-time high in sales up until the January-March quarter this year. The steady hike in property prices also prompted homebuyers and investors to take a breather.
Why does a drop in launches matter?
Project launches are critical to boosting home sales. So, the drop in fresh launches in the quarter hit new sales. In the July-September period, launches dropped by 11% compared with the year-ago quarter. Only NCR and Mumbai Metropolitan Region saw a rise in launches, while the other cities saw a sharp fall. Cities such as Hyderabad and Kolkata saw the sharpest drop.
For 2024-25, top developers have given an aggressive launch guidance, which would be key to meeting their high sales targets. Launches have been delayed or pushed to the coming months, mainly on account of approval delays.
Why is the festive season important?
Property transactions — both residential and commercial — typically see a surge during the festive season that is considered auspicious. The season starts with Navratri and stretches to Diwali and the New Year.
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Non-resident Indian property buying also picks up in this period. Developers consider this a good time to launch key projects and time them accordingly.
What is expected from the season this year?
This year, the December quarter is set to see many project launches. Some of them had been planned for the festive season, but many will spill over to the December quarter due to a delay in approvals. Real estate firms are likely to roll out incentives and deals, including price discounts, easy payment schemes and freebies. Banks too are likely to offer rebates on mortgages and lower processing fees. Top developers such as DLF and Prestige Group are expected to announce key project launches this year.
Is the long-term outlook positive?
The slowdown in sales for two quarters could be a blip, experts said, in a property market that remains largely stable. As long as the gap between launches and sales is not too large, it is not a big concern.
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After a subdued period in sales and launches this year, both are expected to pick up momentum. The top four developers — DLF, Godrej Properties, Macrotech Developers and Prestige — are collectively targeting ₹88,000 crore of sales in FY25, compared to ₹73,000 crore in FY24.
