Realty prices in the country, have been impacted by various factors over the past year, such as the GST, RERA, demonetisation and the support to affordable housing. Experts point out that property prices were largely stable before November 2016 and subsequently, there has been a correction of 2-5% in the secondary market. While developers have resisted price cuts, they continue to offer attractive payment plans.
The implementation of the Real Estate Regulation Act (RERA) and consumer activism against project delays, have pushed developers to focus on completion of existing projects. Institutional investors too maintained a strong interest in financing Grade A residential projects under-construction, in 2016, helping developers to complete their existing projects.
“Implementation of the RERA and GST, a lower home loan interest rate regime and fiscal benefits for tax payers in the Union Budget, will infuse a ‘feel good factor’, which is extremely important for the revival of the industry. The prime minister has already announced a gift to home buyers in the budget segment (both, in rural and urban areas), in the form of interest subvention for home loans,” says Shishir Baijal, chairman and managing director, Knight Frank (India) Pvt Ltd.
According to Surabhi Arora, senior associate director, research, at Colliers International India, the price trends in the top metro cities, have been as follows:
Mumbai and its peripheral areas: The Mumbai residential market started 2016 on a promising note but was adversely impacted by the demonetisation drive.
The gap between buyers’ and sellers’ expectations have widened.
Market activity is likely to remain slow but the second half of the year could be more active, as the gap between buyers’ and sellers’ expectations narrows again on account of realistic pricing.
Pune: Localities adjacent to the commercial hubs of Pune in the west (Baner, Hinjewadi), south (Undri, Handewadi), south-east (Keshavnagar, Hadapsar) and east (Kharadi), were most active throughout 2016. Despite being one of the most active residential markets in 2016, the market in Pune slowed down towards the end of the year.
Residential sales will pick up in 2017 and reputed developers may launch more affordable projects.
Delhi-NCR: New launches will remain limited in both, Noida and Gurgaon.
Contrary to general perception of a significant price correction, there is anticipation that prices will largely remain stable. However, a more noticeable correction of 5%-7% in emerging micro-markets such as Noida Extension, Sector 70 to 78 in Noida, Dwarka Expressway and Golf Course Extension Road looks probable, due to the high inventory available in the secondary market.
Kolkata: The market is almost stagnant and likely to remain so. However, we may see traction in affordable and mid-segment projects.
Bengaluru: Mid-segment projects with realistic pricing, are likely to remain afloat in both, the primary and the secondary markets.
Developers will probably resist cutting prices but continue to offer subsidised payment plans and price guarantees. Prospective buyers should not delay their decision unduly, as they can negotiate realistic prices in both markets.
Chennai: Chennai’s residential market remained subdued in terms of new launches, as well as sales, as buyers’ sentiments remained weak due to a series of events in 2016. However, with cheaper home loan interest rates and increased developer focus on completion of projects, buyers’ confidence should perk up.”
Property price trend and forecast for metro cities
|Metro city||Price range (Rs per sq ft) (As on March 2017)||Change in price per sq ft (-/+) in the last one year||Change % (YoY (-/+)) / Forecast for next one year|
|45,000 – 66,000||-5%||Overall stable in the secondary market. Deal-based discounts will be available in both, the primary and secondary markets.|
|20,000 – 40,000||-3%|
|7,000 – 20,000||-1%|
|Pune (city level)||4,200 – 16,000||-4%||Overall stable in the secondary market. Deal-based discounts will be available in both, the primary and secondary markets.|
|6,000 – 36,000||-2%||Overall stable in the secondary market. Deal-based discounts will be available in both, the primary and secondary markets.|
|4,300 – 11,500||-2%|
|Kolkata (city level)||2,500 – 10,000||0%||Stable|
|19,000 – 27,000||-5%||Stable in localities near commercial hubs. Central and peripheral locations may see 2% to 5% correction.|
|7,000 – 14,000||-1% to -5%|
|4,500 – 8,500||2%|
|4,000 – 8,000||-2% to -4%|
|8,000 – 15,000||5%||Stable|
|4,000 – 6,900||0%||-2% to -5%|
|3,500 – 6,500||0%||Stable|
|20,000 – 35,000||-1%||Stable|
|13,000 – 25,000||-2%||1% to 3%|
|14,000 – 18,000||5%||Stable|
|13,000 – 17,000||2% to 4%||Stable|
|3,500 – 7,500||-5%||Stable|
|3,300 – 5,000||0%||Stable|
|Jaipur (city level)||3,000 – 10,200||-1%||Stable|
Data provided by Colliers International India