The residential real estate market in India is witnessing a fall in prices for the very first time after several years. Prices have gone down in the second half of last year to the tune of 3% on an average across major cities in the country. Pune’s real estate prices went down the most at 7.3% after Mumbai at 5% and Bangalore at 5%. Kolkata, Chennai and NCR witnessed a price reduction of 5%, 3% and 2% respectively. Markets like Ahmedabad and Hyderabad which have high levels of ready to move inventory have seen prices stabilizing by 2% and 3% respectively.
The asset prices in most Indian cities have gone down while the CPI (consumer price inflation) index has gone up. The recent real estate pricing trends are indicative of the stress felt in the residential realty sector in India. The impact of the demonetization drive, the negative buyer sentiments about real estate developers and the introduction of RERA are factors which have all impacted the real estate market in the country.
The number of new launches went down by a whopping 41% in the year 2016, standing at 1, 03, 570 units as compared to the year 2016. This is a drop of 78% in comparison to the 4, 80, 000 units that were launched in the year 2010. The decline in new launches is around 56% in the NCR last year. Housing units sold throughout the country in 2017 went down by 7% to stand at around 2, 28, 072 units as compared to 2016. However, the biggest positive here is that unsold inventory went down by 19% to stand at 5, 28, 494 units as per reports. The market is now steadily becoming more populated with end users while short term buyers or speculative investors have more or less exited the market.
However, a price recovery is steadily taking place in big cities and a recovery will be slow but steady as per experts. The reduction in prices will boost buyer sentiments since they will relish the prospects of snapping up property in big cities at lower price points. This will also boost affordability of home buyers who will no longer be fence-sitters due to greater confidence through RERA, GST and other measures.
