MUMBAI : Home sales in Mumbai, India’s financial capital, jumped to the highest in four years as property developers switched focus to building cheaper apartments, according to Anarock Property Consultants.

Sales in Mumbai rose 22% in 2019 even though a persistent credit crunch and economic slowdown curtailed recovery in India’s housing sales across top seven cities.

Macrotech Developers, a Trump Tower developer in Mumbai, to Godrej Properties Ltd., controlled by billionaire Adi Godrej’s family, are building more low-cost homes as the credit squeeze crimps demand for posh properties. New home starts rose 21% across seven of India’s biggest cities led by affordable flats, highlighting pent up demand in the segment.

“One of the major factors that helped Mumbai become the showstopper in 2019 was the developers’ conscious decision to bridge the demand-supply gap," said Anarock’s Chairman Anuj Puri. “The region saw maximum supply in the affordable category –- something unusual for this market."

But overall housing sales growth slowed to 5%, according to data from Anarock. India’s property market was just recovering from back-to-back blows in the past few years, including a cash ban, new regulation and tax structure, when it faced yet another challenge in the form of a severe credit crunch as its key lenders -- non-bank financiers -- started collapsing.

The credit crunch is now feeding into -- and worsened by -- an economic slowdown that’s hitting demand for goods and services. In 2018, housing sales across top seven cities had grown by 17.6% according to Anarock, but the worsening economy has put a break on this revival.

“The unrelenting liquidity crisis, lower-than-expected buyer sentiments and faltering GDP growth eventually put brakes on the overall housing growth in the second half of 2019," Puri said.

Other highlights from a report launched by Anarock today:

Mumbai Metropolitan Region and Pune saw highest growth in residential sales in current year, while sales declined in Bengaluru, Hyderabad and Kolkata

Affordable housing continued its growth momentum in 2019 with overall new supply rising by 22% on year in 2019

Unsold housing inventory declined 4% to 648,000 units

Average residential property prices across the top cities increased by 1% in 2019 except Kolkata and National Capital region, where prices remained stagnant

Recovery in homes sales will depend on the government’s pledge to salvage stalled projects, Puri said. India last month announced a 250 billion-rupee ($3.5 billion) fund to revive residential projects in a bid to reverse slowing growth in Asia’s third-largest economy.

“Residential growth in 2020 will mainly depend on the swift on-ground implementation of some of the previously-announced sops," Puri said. “A major part of the residential growth will most likely unfold in the second half of 2020."





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