Housing sales in the top eight property markets for the quarter ended December have increased by 28% compared to the figures in the year ago period, with 51,701 apartments being sold in the quarter as per a Knight Frank India report.
While this uptick may partially be due to a lower base recorded during the demonetization quarter, the performance also reflects the benefits accruing as a result of the implementation of RERA and effective 10-15% price correction across key markets. However, it still remains lukewarm as it shows a drop of 28% compared to the last quarter of 2015 when these markets cumulatively recorded sales of 71,820 units.
Total sales for the second half of 2017 across these markets including Mumbai Metropolitan Region, National Capital Region, Bangalore, Pune, Chennai and Hyderabad have declined 2% from a year ago to 107,316 units. It shows that although the demonetization impact is waning, the market is yet to witness a complete revival and is still in buyers' favour.
“The near standstill triggered by demonetization seems to have tapered with time. At the same time stakeholders are growing in confidence with the gradual acceptance of structural reforms such as the Real Estate (Regulation and Development) Act, 2016. Meanwhile, select markets wherein RERA has matured have witnessed developers re-launch projects at attractive prices which led to an uptick in sales volumes in 2017,” said Shishir Baijal, CMD, Knight Frank India. “The strategic switch in developers’ approach has led to a price reduction is most markets. All in all it is a buyers’ market today. And, we hope the momentum to hold steady in the near future.”
New launches across these markets at 19,148 units, witnessed a drop of 21% and 70% compared to December quarter of 2017 and 2015, respectively. Volume of new projects entering the market in the second half of 2017 stood at 40,832 units approximately one-fourth of the supply levels in entire 2015.
During the year 2017, sales volume was down 62% from the peak of 2011 and was at its seven-year low with 7% decline as against 2016. Sales continued to struggle across markets with Bengaluru recording a 34% drop, while Mumbai and NCR markets saw 19% and 21%, spike respectively owing to the demonetization base effect.
Bengaluru, in particular, recorded decline in both launches at 37% and sales at 34% for the first time in the second half of 2017. Hyderabad also recorded the decadal low in home launches. The weighted average prices fell by an average of 3% across cities with Pune witnessing the highest decline of 7% on-year followed by Mumbai at 5%. Markets high on ready to move inventory such as Hyderabad and Ahmedabad saw prices move up 3% and 2%, respectively, showed the report.
At 84%, Hyderabad recorded steepest fall in launches, while other IT/ITeS dominated markets such as Pune, Bangalore and Chennai saw launches declining 58%, 37% and 33%, respectively.
In commercial property segment, new completions increased by 7% in 2017 but not at par with occupiers’ demand. Supply in the second half of the year rose 13% from a year ago. Vacancy levels in office projects hit 5-year low in the face of inadequate supply.