India’s Housing Market Remains A Mixed Bag With No Clear Answers
India’s housing market remains a mixed bag with no clear answers about when the sector could make a firm turnaround after a prolonged slump exacerbated by sweeping regulatory changes in the past two years.
Estimates vary widely on both residential real estate sales and new housing project launches when it comes to how they have fared this year as compared to a year ago. According to, property consultancy Knight Frank, real estate sales were, more or less, flat in the first half of this year compared to the same period last year despite a drop in home prices.
Another report by real estate group CREDAI and JLL, a real estate consultancy said that housing sales in top seven cities in India, in fact, grew by 25 per cent in that same period.
In terms of new housing project launches, according to data from property consultancy Anarock Property Consultants, the number of new launches across seven key cities have gone up by 10% in the first half of 2018 as compared to last year.
But on the other hand, data from Knight Frank shows that the first half of this year saw a net rise of 46% in new launches at 91,739 housing units as compared to the same period a year ago. The quarterly picture, meanwhile, was much more worrying according to the Centre for Monitoring Indian Economy, saying that new project launches had actually dropped by 60% in the most recent quarter compared to last year.
The housing market in India has been in a slump because of a combination of factors. For starters, the mismatch between buyer and seller price expectations has led to a massive backlog of unsold inventory of housing units. But even before the houses hit the market there are usually delays in project execution and litigation on land disputes, among other things.
The introduction of regulatory changes such as the new real estate law RERA, intended to protect home buyers and bring transparency, along with the government’s demonetisation exercise and the introduction of the Goods and Services Tax (GST), pushed many large developers into a wait-and-watch mode, industry experts point out.
Despite the recent positive sentiment behind the launch of new housing projects, the massive backlog of unsold inventory continues to be a grave problem in major cities. Nearly 576,000 housing units worth Rs 4.9 trillion ($70 billion) are behind schedule in seven key cities, according to Anarock.
According to property consultancy Liases Foras, affordable homes now make up nearly 20% of residential property sales compared to 8% in FY2016. On average, these houses in the affordable segment are typically priced at an average of Rs 2.5 million.
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