Delhi and Mumbai, 2 of
the biggest residential property markets in India, have shown divergent trends
in price appreciation in the last 2 years. While Delhi recorded the least price
rise at 4.4%, Mumbai showed highest appreciation at 25.27% between June 2012
and May 2014.
The prices in Pune grew
21.9%, in Bangalore 19.47%, Kolkata 17%, Hyderabad 16.8% and Chennai
13.2% during the same period, according to data by real estate research
firm PropEquity.
In the same period, the
inventory levels have been rising. Mumbai Metropolitan Region has an inventory
of 53 months at the end of June this year, while the National Capital Region
has an inventory of 45 months, Chennai has an inventory of 26 months the data
by research firm Liases Foras shows.
"Buyers were in a
wait-and-watch mode. The demand is there, but people have been delaying their
purchasing decisions due to various factors which lead to such a huge inventory
pile up," said Mr. Harinder Singh, MD, Realistic Realtors.
Due to developers' focus
on clearing the existing backlog, the number of new launches has also come down
drastically in the range of 47% to 92% across all 7 major cities at the end of
May this year (2014), compared to June 2012, according to PropEquity data.
Experts said the slowdown
has impacted the investor's market of Delhi - NCR the most. Many non-resident
Indians (NRIs) had stopped buying and there was hardly any activity in the past
couple of years, leading to such minimal appreciation in prices. The realty
market is seeing declining sales coupled with higher inventory for the last 2wo
years. Moreover, developers are hard-pressed on funds with not many lenders
willing to lend money to the ailing sector.
Earlier, the political
uncertainty had impacted buyers' and investors' confidence. It was expected
that the demand would return in the sector once sentiments improved. However,
now it seems it will require much more than sentiment for a full revival in the
sector. With a new government in place, experts are expecting the realty sector
to bounce back soon.
The markets have already
started showing signs of an improvement. "The activity and interest level
have gone up since the formation of a new government. We are seeing increased
property inspection visits as well increased footfalls in developer's offices
of potential buyers / sellers.
Overall, the number of
queries has increased by almost 1.5 times compared to the past six
months," said Mr. Ashutosh Limaye, head (research and real estate
intelligence service) at Jones Lang LaSalle India.
Src: BS
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