Increase in property registration costs and market value has slowed down home sales in Hyderabad.
According to real estate consultancy firm Knight Frank India, upward revision in registration/market value effective for the second time in financial year 2022 caused apartment sales registration volumes to drop 25 per cent year-on-year in February 2022.
The monthly residential property registrations in Hyderabad stood at 5,146 units in February 2022. The Hyderabad residential market includes four districts -- Hyderabad, Medchal-Malkajgiri, Rangareddy and Sangareddy.
The rise in registration costs has hit the less than Rs 25 lakh category the most, as sales registrations in this category reduced significantly to a mere 844 units in February 2022 as against a much robust 2,888 units in February 2021.
According to the Knight Frank report, 69 per cent of residential sales registered during February 2022 occurred in the under Rs 50 lakh ticket-size category, as compared to 76 per cent in February 2021.
Within this category, demand in the less than Rs 25 lakh ticket-size remained weak at a mere 16 per cent in February 2022, compared to 42 per cent in February 2021.
Traditionally, this extremely price-sensitive segment constitutes the highest sales registrations in the Hyderabad market and the steep fall in its share accounted for the lower volume of sales registrations in February 2022.
The share of sales registrations of all other ticket-size segments stayed stable or grew marginally in YoY terms in February 2022. The Rs 25-50 lakh ticket-size segment's share grew the most, from 34 per cent in February 2021 to 52 per cent in February 2022.
In the Rs 50-75 lakh ticket-size segment, the growth was 14 per cent in February 2022, compared to 11 per cent during the same month last year.
The growth seen in the market shares of the mid and high ticket-size segments is also reflected in the share of sales in various unit size ranges.
The share of sales in all unit sizes over 1,000 sq ft constituted 85 per cent to all home sales registrations in February 2022. Of these, homes in the size of 1,000 to 2,000 sq ft consist of 74 per cent of all sales registered during the period.
The trend of homebuyers looking to upgrade and move into larger living quarters, sparked by the pandemic, continued to hold strong in February 2022 as well.
While total sales dropped by 25 per cent in YoY terms in February 2022 for the four districts, a district level analysis shows that Hyderabad district saw a 64 per cent YoY drop in sales registrations during the period under review.
Even in terms of share of total sales, the district accounted for 10 per cent of the residential units registered during the month, compared to 20 per cent from a year ago.
"Hyderabad has been among the strongest residential markets in the country in terms of sales price growth for the past few years. However, sales registration momentum has been hindered in the first two months of 2022 due to the operational restrictions in January caused by the Omicron virus and increased property registration costs thereafter in February," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
"While this slowdown is notable especially in light of the change in behavior of the price-sensitive homebuyer in the less than INR 2.5 mn category, we do not view this as an immediate cause for concern and expect the pace of registrations to normalize over the course of the year," he added.
