Thursday, January 11, 2018

Poor demand due to note ban, GST, RERA pushes housing prices down across India @KnightFrank_IN

The Knight Frank report released Wednesday said property prices in Indian cities have reduced. It said Pune saw a 7 per cent drop, while developers in Bengaluru and the National Capital Region cut prices by 5 per cent and 2 per cent, respectively.

Speaking about the findings,  Shantanu Mazumder, Senior Branch Director – Bengaluru said, “Bengaluru’s residential market has been impacted by a variety of factors impacting both demand and supply. Residential sales have witnessed a 34% YoY decline in H2 2017 over H2 2016. On the launches front, though the declining trend began since 2014, the rate of decline was never as marked as in 2017 as the new supply nosedived by a mammoth 71% from the peak witnessed in 2013. North and South zones have witnessed maximum curtailment of new launches registering a YoY decline of 66% and 52%, respectively, in H2 2017, as developers put new project launches on the backburner whilst they prioritised RERA compliance. On a YoY basis too, overall city launches declined by 37% in H2 2017. Competitive pricing coupled with a sharp decline in new launches in 2017 has worked in the favour of Bengaluru developers; as a result, the unsold inventory has gradually declined by 10% YoY in H2 2017. In terms of micro-markets Sarjapur Road, Kanakpura Road, Thanisandra and Devanahalli have been the buyers’ choice; however, with the metro construction in full swing, Whitefield too has picked up pace.
According to Samantak Das, chief economist and national director at Knight Frank,  5 per cent drop in prices effectively translates to a total cost benefit of 11 per cent to 12 per cent for home buyers in Mumbai.

“Apart from the base price reduction, which developers have been forced to undertake in order to prioritise offloading inventory level, a bouquet of incentives such as waivers, free of charge floor rise and assured rental schemes, which are available a dime a dozen in the market lends significantly to the price advantage,” said Das.