Absorptions in top seven residential property markets in the country have been weakest in the seven quarters in the three months of October-December 2014, as the buyer demand continues to remain sluggish and new launches of projects fall.
The domestic market saw sales of 57,490 residential units in Q3FY15, a fall of 23% year-on-year, data sourced from PropEquity shows. The numbers have been on a downward spiral quarter after quarter for the last two years. In April-June 2013, there were 90,488 units sold.
The seven markets include the Mumbai Metropolitan Region (MMR), Delhi/NCR, Pune, Bengaluru, Kolkata, Chennai and Hyderabad.
Mudassir Zaidi, national director (residential services), Knight Frank India, told FE that there has been no change in the trend of falling sales numbers as the factors contributing to housing sales remain the same. “From the point of view of customers, there is not much change in the macro-economic environment for it to have any positive impact on income levels of individuals. Interest rates have also not changed, which is an important factor in bringing down EMIs. So, the buyers continue to sit on the fence looking for value options.”
Anshuman Magazine, chairman and managing director, CBRE South Asia, says that while the decline in sales has been noted across all major cities, it has been particularly steep in the Delhi/National Capital Region (NCR).
NCR market continues to reel under the oversupply scenario, having the highest supply of unsold residential units in India, currently at various stages of development. According to PropEquity, NCR had a supply of 2.10 lakh unsold units at the end of three months of October-December 2014.
Following closely is Mumbai, with an unsold stock of 2.08 lakh units in development stages. However, unsold units have been on the decline in the city. After touching 2.15 lakh units between April and June 2014, the stock of unsold units has been dropping in the Mumbai Metropoitan Region (MMR) as a whole.
“Keeping in mind subdued end-user/investor sentiments, many developers in major markets abstained from launching new projects, and instead directed their focus towards reducing the existing inventory pile-up,” Magazine said.
Barring NCR, which saw higher launches in Q3, all other six markets covered in PropEquity research showed a decline in new launches numbers.
Lalit Kumar Jain, chairman, CREDAI, says that housing sales are declining due to the “shaky customer confidence”. “The spending power is completely gone from the hands of the buyer as there has been no growth in the economy for long. Interest rates for home loans have moved from around 8% seven years ago to close to 11% now. Coupled with this, inordinate delays in clearances and approvals have led to project delays, which is adding to uncertainty in the minds of the consumer.”