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Residential Real Estate Hints Revival

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Many reports by research firms and property consultants have indicated that the top 8 cities are showing better demand and sales in the country for residential properties due to government initiatives like subvention on affordable housing, steps to eradicate black money and prop up end-user.

Liases Foras Real Estate Rating & Research shows data that sales in the residential market across 8 cities have risen by 6% on a sequential basis in the second quarter taking the total growth to around 28% post demonetization previous year.

The sequential growth is important as the rise was recorded after the 21 percent increase in the last quarter. This is despite the implementation of RERA Act and GST. Looking at the annual basis, during the quarter the rise in sales stood at 4 percent.

Looking at another report, Knight Frank India suggested that residential sales have increased led by affordable housing and getting rid of the woes of demonetization. They further indicated that even though the sales in first half of 2017 till June are down by 11 percent, they have risen by the same proportion when compared with July-December period that went through demonetization shock.

According to Liases Foras, the Mumbai Metropolitan Region (MMR) recorded the highest sales in the past seven years. It constituted 24% of the overall sales in tier I cities, recording the highest number of sales at 15,824 units.

Pankaj Kapoor, Managing Director of Liases Foras Real Estate Rating & Research said, “Post-Lehman crisis, the market had corrected almost over 30% and had adjusted itself to see more affordable home launches. The similar feat is being repeated, albeit this time the adjustment is more through time correction as the prices have remained stagnant for the last three years. In addition to this, we are again seeing a good amount of affordable home launches spurred by the government initiatives.”

The government gave infrastructure status to affordable housing segment in the Union Budget 2017. Prime Minister Narendra Modi, under the Pradhan Mantri Awas Yojna, had announced the government’s decision to provide interest subvention of 3% and 4% for loans of up to `12 lakh and `9 lakh, respectively.

Keki Mistry, Vice Chairman and CEO of HDFC said, “Given that interest rates are lower and property prices have not moved up for long, home buyers are showing a keen interest in buying houses on the back of incentives provided by the government.” HDFC witnessed 21% growth during the quarter ending June with individual loan disbursements while Indiabulls Housing Finance also witnessed a 39% on-year jump in its loan disbursements for the quarter ended June and recorded 28% growth in the previous quarter. In the last one-year housing loan interest rates have motivated home buyers to act as it has eased by 100 basis points.

With improving sales and slower new project launch, the inventory levels across tier I cities de creased to 44 months in the June quarter from 47 months in the previous quarter. However, it is still far from the desired 8-10 months market inventory.

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