Cheer in the realty sector as home sales increase by 6%

Aided by stagnant pricing, discounts from builders and launch of new projects at lower prices led to increased Home sales by 6% in the January-March quarter from that a year ago across eight top cities of India, according to a report by property research firm Liases Foras.

For the first time since January March 2014, the total sales across eight tier 1cities crossed 60,000 units. “The gap between prices of apartments and affordability has reduced to some extent, which has helped sales. It is an end-user driven market today,” said Pankaj Kapoor, managing director of Liases Foras.

Real estate Sales in the National Capital Region were up 33% and in Mumbai 12%, while in Bengaluru sales dropped 18%. Ahmedabad went up 32% in property transactions, whereas Chennai and Hyderabad witnessed a 25 per cent and 20% growth respectively. Kolkata was up by 14% while sales in Pune declined by 25%.

Although Prices remained flat in Mumbai, NCR saw a correction of 3% from a year ago, helping developers push their stock. Ahmedabad is the only city to witness double-digit growth in prices at 12%, the report observed.

Sales of houses under Rs 25 lakh increased 46% in the past one year while sales in the Rs 25-50 lakh bracket grew 13%, signifying greater affordability of homes.

“With prices remaining stagnant over the past two years across  markets coupled with falling interest rates on home loans, more people have started buying homes,” said Getamber Anand, national president of the Confederation of  Real Estate Developers Associations of India.

“The economy is booming; money is being spent on infrastructure. If there are good rains this year, the impact on home sales would be even higher,” said Niranjan Hiranandani of the Mumbai based Hiranandani Group.

Pankaj Kapoor of Liases Foras said that, if builders in Mumbai are able to spruce property prices by a further 15 – 20%, home sales could perk up to three times of the number today.

Real Estate market of Mumbai

Now some of the buyers are finally returning to the real estate market of Mumbai, as real estate developers are offering 5 to 10 per cent discount and other offers as well such as; foreign trips, free parking space, free car, free AC and more. Now in Mumbai’s real estate market due to reduced size of apartments and falling interest rates now it’s easy to sale the residential property and now currently home sales in Mumbai is 28 percent more in comparison of last four quarters, as per the reports of JLL India.

According to the Ramesh Nair, COO of JLL India, This is the balance of factors as; interest rates are dropping and real estate developers are offering huge discount, freebies with attractive schemes, sizes of apartments are dropping to make the apartments more affordable, buyers are thinking that market is all time low and it have bottomed out and all these factors lead towards the overall marginal improvement in the confidence of customers”. However; as per the trend it’s clear that in few launches people prefer to buy residential units whereas; in broad market there is no progress. Local property markets are not convinced with the latest numbers and statement that real estate market continues to be sluggish and these numbers may or may not be reflect an improvement in end-user sentiments.

According to Yashwant Dalal, President, Estate Agents Association of India, “In present, resale segment is seeing thin volume and even in primary market new launches, financial institutions are underwriting inventories. The more he added that we have the last year numbers and this year its much more than the last year”. As per the JLL India report, “Real estate developers in Mumbai have managed to sell more than 16,990 units in new projects in primary market in the duration of last four quarters, which ended on the September 30. And in previous four quarters the sales of residential units were 13,290 apartments. In slow market it is the sign of improvement and it has released the pressure on real estate developers. Due to weak price and more supply than demand in the market, real estate builders are shying away from the launching of new projects. However; the new launches in the first six month of 2015, was declined by 26 per cent from a year ago. As per the local brokers, real estate builders would prefer to hold the supply as well as construction than reduce prices and incur losses.
According to real estate market expert JLL India is not expecting rise in the price of houses for next two to three years as still builders are focusing on the inventory cleaning. In past few months we have seen some price correction which happen in last quarter, but capital values have not gone up. According to local brokers, real estate developers would prefer to hold the supply and the construction in different projects to bring down the price and incur losses. However; real estate developers are maintaining affordability of apartments just by reducing the size of residential units with the average reduced size of roughly 6 per cent annually.

Performance in Stock Market:

There are many real estate developers which are listed in stock market such as; DB Realty, Oberoi Realty, Hubtown, Mahindra Lifespace Developers and Godrej Properties and they are operating in Mumbai. The hottest property markets in the country have declined by the rate of 214 per cent in the past one month. According to real estate analysts, the second half of the financial year will be better for the organized players as they are ready with new launches to erase the debut. As per the statement of Samar Sarda, Lead Analyst in Real estate Segment at the Kotak Institutional Equities, “The overall real estate market will continues to shrink and most organized developers will get the more growth and gain in terms of market share.