Home Demand High But Real Estate Market Down
Despite of high home demand, stable property prices and a large inventory on sale, India’s real estate business is in slump. To lure buyers developers are trying the tricks such as price cuts, no floor rise (the premium buyers pay for apartments on higher floors), zero Goods and Services Tax (GST), payment flexibility and lenient loans.
Offers like these were on display at the Maharashtra Chambers of Housing Industry (MCHI-CREDAI) realty exhibition in Mumbai. Still, the market is down.
According to developers consumers still do not have that much trust in the market, rest how the market will shape up in next six months, it is early to predict as it would take another year.
The largest real estate developer DLF Ltd, suspended home sales after Real Estate (Regulation and Development) Act (RERA) was rolled out on May 1, on a cautionary note and resumed the sales after six months.
Four years ago there was a slowdown in property sales due to high prices, delays in handing homes and loss of faith in builders not keeping their promise. Implementation of RERA and GST added to the disruption (although both are fundamentally good measures).
According to property analysts, buyers are back but too few in number to pull the business out of the slump. Most sales are in lower price range and many developers in larger cities are struggling to offload residential stock.
Because of affordable segment market has been able to hold up. Builders have committed much more than they have delivered leading to huge pile-up of inventory.
Director of Liases Foras Real Estate Rating and Research Pvt. Ltd. believes this is the best time for serious buyers as prices have stabilized and developers are offering a range of incentives, particularly for ready-to-move-in homes.
Project launches after the implementation of RERA and GST this year have slowed down and sales when it was recovering from the November 2016 demonetization which wiped 86% of cash in circulation.