1. Lack of trust keeping home buyers away from residential real estate market

Lack of trust keeping home buyers away from residential real estate market

Potential homebuyers kept away from the residential real estate market following demand slow down, unaffordability, product-mismatch and the lack of confidence in the market.

By: | Published: August 11, 2016 5:54 PM
Lack of trust keeping home buyers away from residential real estate market Potential home buyers kept away from the residential real estate market following demand slow down, unaffordability, product-mismatch and the lack of confidence in the market. (Photo: Reuters)

Buying a home became unaffordable across major city on account of price rise and rising gap between incomes and inflation, said a study by realty consultant JLL India. Potential home buyers kept away from the residential real estate market following demand slow down, unaffordability, product-mismatch and the lack of confidence in the market.

Rising unsold inventory is major cities across the country is quite common now with it standing at 25 months from global financial crisis of 2008 to 2015. “Over the last two years, unsold inventories of residential units have escalated to levels that were unsustainably high and it continues to remain there for a very long time. For instance, an unsold inventory of around 18-20 months is typically considered normal in today’s circumstances. However, the average unsold inventory since the GFC erupted in 2008, until 2015, stands at 25 months, with the latest reading outnumbering the average by a considerable number,” Anuj Puri – chairman & country head, JLL India said.

The residential sector continues to witness price rise following rising input costs and untamed margin expectations of the developers and investors. The study further added that the performance in the residential sector would improve once home buyers confidence is restored and issues like price stagnancy and falling sales are addressed.

Real estate sector has been witnessing a slowdown and residential sector, which was once known to be recession-free a few years ago, also experience sluggish growth.

Puri further added,” The perception that housing can be aloof to a slowdown was well-entrenched within all stakeholders including the developers and investors, as it had not only recovered from the adverse impact of GFC quickly, but most cities saw prices recovering way beyond the previous peak which was observed in 2Q2008. Also, given that housing is a basic need and that demand far outpaced supply kept developer’s and investor’s faith in this sector alive.”

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