BANGALORE | MUMBAI: Home sales in India could rebound in 2013, helped by quicker project approvals and lower cost of finance, according to analysts.

"Residential markets have entered CY13 on an encouraging note, with robust offtake seen in new launches across markets over the last three months," global financial services group JP Morgan said in its January report. "We expect volumes in residential markets to improve over the next 12 months on pick-up in pace of new launches coupled with price discounting and mortgage rate cuts." 

According to CRISILBSE -1.47 % Research, absorption of new residential units across six key cities - Mumbai, the National Capital Region, Pune, Bangalore, Chennai and Hyderabad - is expected to increase at a compound annual growth rate (CAGR) of 7% to 251 million sq ft in the next two years. During this period, Mumbai is expected to record the highestCAGR of 14% due to pent-up demand, while capital values across regions are expected to rise marginally in the second half of 2013, the research body said. 

The projection is a contrast to numbers reported for last year. According to JP Morgan, sales of residential units across major markets like Mumbai and NCR had dipped between 7% and 38% in first three quarters of 2012. Only Bangalore and Kolkata bucked the trend, recording growths of 3% and 6%, respectively. 

"Sales at new projects are showing signs of recovery and a lot of new launches are being worked based on customer responses. Prices may not see any major uptick, but demand is certainly better than last year including in Mumbai and NCR," said Lalit Kumar Jain, president of developers association CREDAI, which has about 10,000 members. 

Backing the estimate is state-run lender Punjab National BankBSE 0.45 %, which has seen a 14% growth in home loans in the last quarter. "In the last four to five years, property price escalated steeply in major metros, but now it has stagnated. The next six months will be a turnaround time for the housing industry with inflationeasing and chances of the cash reserve ratio coming down," said SS Bhatia, its general manager for retail. 

Last month, the Reserve Bank of India reduced the repo rate by 25 basis points to 7.25%, fuelling hopes that home loans will become cheaper. 

"Further reduction of interest rate will lead to higher offtake of property. Loan disbursal has been reasonable, but actual recovery will depend on the economy," said VK Sharma, chief executive of LIC Housing FinanceBSE 0.23 %. 

Ashish Puravankara, joint managing director of Puravankara ProjectsBSE 2.08 %, said, "Last year was a consolidation phase for builders but this year the market will recover, riding on new launches across various geographies. Markets like Chennai and Bangalore have outperformed other bigger real estate markets." 

The Bangalore-based builder saw about half its stock in a newly launched property in the city being snapped up in 10 days. "We have already sold 2.14 million sq ft in the current fiscal and expect to exceed three million by the end of the year." 

Similarly, Mumbai in last few months has seen a rise in the number of launches on the back of approvals and response to new projects. Property sale registrations in the city rose to a 24-month high in December, reflecting a jump of 5% from a year ago and 42% from the previous month. 

"Market has started to respond and there is a change in sentiment, especially after the interest rate reduction. For long, there was only anticipation of fall in prices, but now customers are acting upon it," said Gaurav Gupta, director of Omkar Realtors and Developers. 

Omkar Realtors has sold 150,000 sq ft in the last 15 days at its nearly 2-million-sq ft premium residential project at Worli, Mumbai, taking its total sales across three Mumbai projects to nearly 0.5 million sq ft in the last two months. 

According to some property brokers, engineering firm Larsen & Toubro's realty arm has sold nearly 300 apartments in a recently launched residential project at its campus in Powai. "We have done a soft launch of L&T Emrald Isle at Powai. The response was very encouraging, and bookings will resume shortly," a spokesperson for L&T said.