According to the latest Economy Survey for 2017-18, in spite of the residential real estate sector being badly impacted by several policy and regulatory changes, these have actually benefited the industry by way of lowering the number of unsold units. The unsold inventory levels have fallen to approximately 807, 903 units as of October, 2017 as compared to 888, 373 units unsold as of April, 2016. The real estate sector accounted for a reasonable 7.7% of the total GVA of the country for 2015-16. The sector witnessed a slump in growth over the last couple of years to 6.6% in 2014-15 followed by 4.4% in 2015-16. The ownership growth of dwellings has gone down to only 3.2% in 2015-16.
New launches have come down to their lowest levels, i.e. approximately 58, 000 units in the first half of 2017 across the top 14 Indian cities as per reports. Residential sales volumes have fallen to a new 5-year low, however, standing at 101, 850 units for this duration. Sales came down by 38% for H1 2017 as compared to the same period in 2016, 56% was the de-growth in unit launches in this period as well.
The real estate sector can take heart from the increase of around 11% witnessed in 2016-17 in case of home loan disbursements of housing finance corporations and public sector banks as compared to 2015-16. Growing NPAs, higher risk provisioning allocated for the realty segments and lower profits in this industry initially made financial institutions somewhat reluctant to lend to this sector. However, things are changing for the better as per reports.
According to the NHB RESIDEX report, prices of homes have been showing the annual trend of increasing across 36 major cities in the period between April and June, 2017 out of the 50 top cities. Vizag has seen the biggest increase of 15.7% while Delhi has witnessed a handsome 8.1%. Noida has witnessed the lowest increase of 0.9% which is heartening nonetheless after the previous slump. Prices fell majorly in Bhiwadi by 10.6% and by 6.6% in Coimbatore while they went down by 5.9% in Chandigarh.
After agriculture, real estate and construction are the largest generators of employment in the country. 40 million workers were approximately employed as of 2013 and this could increase to 52 million people by the year 2017 as per estimates. This could also touch 67 million workers by the year 2022. The PMAY reforms have seen 3.1 million homes getting Government sanction in the affordable housing space. Out of this figure, around 0.4 million homes have already been built while 1.6 million units are currently being constructed. The CLSS (Credit Linked Subsidy Scheme) under the PMAY was previously extended in order to benefit the Middle Income Group or MIG. RERA has already ushered in greater transparency and this will only benefit the sector going forward.
