As per a study by Colliers International India, residential property launches in India went down by 17% in the first half of 2017 as compared to H2 of 2016 because of implementation of the Real Estate (Regulation and Development) Act (RERA) and nationwide execution of the Goods & Services Tax (GST).
Colliers is expecting the number of new launches to further decline in H2 2017 as RERA and GST compliance will continue to remain a challenge for several developers for at least the next six months.
Supply of new projects will remain restricted in the market in short to medium term but this will help ease the oversupply situation in most markets. After the recent bank rate cut by RBI in July 2017, we do not expect any further rate cut in H2 2017. Also, the prices have been stabilised in most markets, and any further reduction is unlikely. Thus, buyers should expedite their buying decisions and take advantage of lower interest rate regime. The first-time homebuyers can also get benefit from the incentives under Pradhan Mantri Awas Yojna (PMAY), said Surabhi Arora, Senior Associate Director, Research, Colliers International India.
However, the sales are likely to pick up during the festive season due to higher optimism among buyers after RERA that is expected to solve the issue of unsold inventory in the market.
As per Colliers, 40,600 new units introduced in the first half of 2017 in prime cities, with Mumbai and Bengaluru accounting for 35% and 33% of total launches respectively, while Chennai, Pune and NCR accounted for the remaining 13%, 10% and 9% share.
The segment most affected by the new regime has been the luxury segment with the number of launches reducing considerably in this segment. Colliers forecasts similar sentiments to prevail in the next six months, with affordable housing grasping a major share in new launches.