Housing demand revival unlikely in 12-18 months: CRISIL


As per CRISIL’s projection, the demand for residential property is unlikely to revive in the next 12-18 months because end-users are not coming forth and the presence of investors in the market is also quite low.


According to research by the agency, take-up of new homes has been on a slide for over six years now. Homes sales in the top 10 cities – Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, MMR, NCR and Pune – have declined at a compound annual growth rate of 8% since 2011. "The trend appears set to last well into fiscal 2019 or beyond, portending more pain for developers," said the research.


It is the exorbitant prices of properties that is keeping end-users away from the market, leading to drop in absorption level across property markets. What’s more, concerns over job losses and lack of employment opportunities – especially low-skilled ones such as in IT/ITeS -- on account of increasing automation, among other things, are increasing. As of now, homebuyers prefer to live in rented accomodation than buy flats to avoid high down-payments and equated monthly instalments.


"Though capital values have been under pressure over the past few quarters, a significant chunk of supply in many micro markets remain unaffordable. There are risks associated with delivery of under-construction projects, especially delays in getting possession from the developers, which deter buyers," said the Crisil research report.


According to the rating and research agency, a turnaround in buyers’ confidence will happen only when builders will see the Real Estate (Regulation and Development) Act (RERA) working in their favour. Many builders were focussed on mid-category/ luxury and premium housing projects till recently leading to huge unsold inventory of units – especially in the mid-segment – which are beyond the reach of the average buyer. 

Written by The Realty Paper

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