News: Residential sales improve sequentially post demonetisation: Knight Frank India-06.07.2017
Residential sales improve sequentially post demonetisation: Knight Frank India
MUMBAI: Residential real estate sales, led by the performance of affordable housing, is registering improvement in pace and has come out of the shadows of demonetization woes. However, it is yet to reach the pre-demonetization levels.
While sales across top eight cities during 2017’s first half ended June is down 11% on year, it has risen by the same proportion when compared with July-December period that was marked by the demonetization shock, showed a Knight Frank India report.
Affordable housing has been outpacing other segments on account of the government’s thrust on Housing For All, discounts on ready inventory and improved sentiments among buyers courtesy RERA has driven sales volumes on sequential basis.
The first half of 2017 has witnessed the resurrection of affordable housing across India with 71% of the launches under the Rs 50 lakh price segment up from 52% during the same period last year. Property markets of National Capital Region, Kolkata, Pune and Ahmedabad have driven the revival of affordable housing projects with around 80% of launches in these cities in the sub Rs 50 lakh segment.
Following the government’s demonetization announcement, there were signs of extreme caution by buyers, while real estate developers also refrained from announcing any new launches during this period. Although the market may not soon move closer to the levels seen almost three years ago since when it has been in a slumber, the improvement in sales numbers is robust, experts said.
However, on annual basis, the performance of residential real estate, both in terms of launches and sales continues to be down. Residential launches have come to a grinding halt and have declined 41% to its seven-year low. This was attributed to hangover of demonetization in January and February, while launches were hit in May and June own account of RERA compliance.
Sales volume is also down 11% from a year ago and is lowest first-half sales in the past five years.
“Some of the most path-breaking reforms in independent India came to force in quick succession over a span of a few months. Described by many as the battery of reforms against the black economy in an unorganised sector, brave policy decisions such as demonetisation, the Real Estate (Regulations and Development) Act, 2016, the Benami Transactions (Prohibition) Amendment Act, 2016 and the recently rolled out Goods and Services Tax Act (GST) have time and again pushed the already sluggish residential market to the brink,” said Shishir Baijal, CMD, Knight Frank India.
However, he believes that these were corrective measures long due to transform real estate into a robust and transparent industry. These short-term hiccups grappling the sector would eventually fade away and help the industry thrive.
Barring Chennai new projects dried up in all the eight cities. NCR and Ahmedabad were worst hit with launches plummeting by 73% and 79%, respectively. Sequentially, Mumbai picks by close to 62%, albeit lower by 36% on-year. Chennai was the only market to record a marginal 4% on-year rise in launches, showed the Knight Frank India report.
At 596,044 units, unsold inventory was at the lowest across the eight cities during first half of 2017, albeit owing to the shrinking market size. NCR was the worst market with over four years of inventory. There has been a surge in inventory in the ‘ready for possession’ category.
