Property prices fall, Demand Up – Insights from Liases Foras’ Residential Market Report

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Home buyers are expecting a fall in property prices post demonetisation, but developers say that will not happen.

DELHI: Real estate research firm Liases Foras has released its Residential Market Report for the second quarter of FY 2016-17. We give you key highlights, that will help you in your quest to invest in property.

Sales have improved

On an annual basis, sales across 8 major cities in India improved 15% in Q2 2016-17. Sales were dominated by MMR and NCR which have shown 39% and 11% growth, respectively, on YoY basis. Ahmedabad and Kolkata on the other hand have shown noteworthy improvement in sale. It is interesting to note that the improved sentiment could be seen despite the period of Pitra Paksh, a time considered inauspicious for purchase by many Indians.

Mumbai and NCR markets are recovering

MMR & NCR have seen stagnant prices last 2 years and due to reduction in the interest rate, the gap between prices and affordability has reduced, which has translated into sales growth. It has also been observed that about 30%-40% of the sales have been recorded in projects that are nearing completion.

Demand in South India was muted

On a quarterly basis, the numbers were slightly muted. While Kolkata, MMR and Ahmedabad recorded more than 10% growth in sales over the quarter, other cities like Bangalore, Chennai and Hyderabad saw decline.

Even the ultra-luxury segment is picking up

Not only the affordable segment (units priced up to 50 lakhs) saw an increased demand, but the ultra-luxury segment (More than Rs. 2 Crores) also witnessed a 38% annual growth in demand. MMR, NCR and Bangalore were the biggest contributor to sales in this segment.

Kolkata leads in terms of new property launches

New launches rose 8% QoQ in Q2 FY16-17 led by NCR and Ahmedabad. Kolkata saw 54% of the launches in the affordable segment (Less than Rs. 25 Lakhs), while maximum launches in the cost bracket of Rs. 25 Lakhs – 50 Lakhs was recorded in NCR. New launches in Bangalore have dipped by one-third as compared to the last quarter. This shows developers are focusing more on offloading existing inventory. The market is adjusting and preparing itself for long gestation. Kolkata saw two major launches for the quarter.

New launches have increased unsold stock

Unsold stock across the tier I cities climbed 12% and the increase is mainly attributable to new launches.  Maximum increase was witnessed in Kolkata, followed by Ahmedabad and MMR. Pune has crossed 1 lakh units of unsold stock. As on Q2 FY16-17, the unsold stock for 8 tier I cities crossed 1,200 million sq. feet. Owing to the steady pace of sales, the Months inventory dropped across most locations with an exception of Chennai and Kolkata.

Property prices decline in Pune, NCR and Kolkata

The weighted average price across the eight tier-1 cities remained stable over the quarter.  On a yearly basis, however, weighted average prices rose 3%. Hyderabad and Ahmedabad saw double-digit annual price appreciation. On the other hand, Pune saw a 3% YoY price decline, followed by NCR and Kolkata, at 2%, each.

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