Property prices have fallen slightly in most major Indian cities in the past year: Report



Slack demand, huge inventories, and stringent regulations have kept home prices low across major Indian cities, says the latest report for the first half of 2019 by real estate research firm Knight Frank.

Mumbai MR:

Price: Rs 7,115 per ft/ Rs 76,591 per m

12-Month price change: -3%

6-Month price change: -1%

Unsold units: 1,36,525

1-year change: 14%

Age of inventory (QTRS): 15.5

Quarters needed to sell this: 8.5

Despite the highest prices in the country and RERA rollout in Maharashtra, Mumbai saw a surge in new launches in the past year. The inventory has risen and it will take more than two years to clear if sales continue at the same pace.

Chennai:

Price: Rs 4,377 per ft/ Rs 47,110 per m

12-Month price change: -3%

6-Month price change: 0%

Unsold units: 17,810

1-year change: -21%

Age of inventory (QTRS): 14.4

Quarters needed to sell this: 4.5

Launches were few and sales were tardy in the past one year in Chennai, but prices came down, leading to a big fall in the inventory. The drinking water crisis facing the city may bring down prices further.

Delhi NCR:

Price: Rs 4,400 per ft/ Rs 47,362 per m

12-Month price change: 3%

6-Month price change: 4%

Unsold units: 1,30,001

1-year change: -18%

Age of inventory (QTRS): 19

Quarters needed to sell this: 12.9

Delhi NCR saw a good uptick in sales and new launches, and real estate prices also rose steadily. The inventory has declined and will take more than three years to clear if sales continue at the same pace.

Hyderabad:

Price: Rs 4,373 per ft/ Rs 47,071 per m

12-Month price change: 9%

6-Month price change: 7%

Unsold units: 4,265

1-year change: -67%

Age of inventory (QTRS): 15.8

Quarters needed to sell this: 1.1

Hyderabad stands out among all the cities with the highest increase in property prices and a big dip in the inventory despite a huge infusion of new launches. If sales continue at the same pace, the unsold stock will be gone in three months.

Bengaluru:

Price: Rs 4,821 per ft/ Rs 51,893 per m

12-Month price change: 2%

6-Month price change: 3%

Unsold units: 85,387

1-year change: -14%

Age of inventory (QTRS): 12.5

Quarters needed to sell this: 8.6

The city has seen a big uptick in sales. Despite a number of new launches, inventory declined, though its age remained static. Bengaluru has seen a small rise in property prices but improvements in infrastructure could accelerate the rise.

Kolkata:

Price: Rs 3,227 per ft/ Rs 34,735 per m

12-Month price change: -2%

6-Month price change: -1%

Unsold units: 34,575

1-year change: -11%

Age of inventory (QTRS): 13.6

Quarters needed to sell this: 11.3

Prices were low and fell more in the past 6-12 months. Despite this, sales and new project launches were down. The inventory has declined but still needs nearly three years to clear if sales continue at the same pace.

Pune:

Price: Rs 4,304 per ft/ Rs 46,327 per m

12-Month price change: -4%

6-Month price change: -2%

Unsold units: 31,650

1-year change: -15%

Age of inventory (QTRS): 12.9

Quarters needed to sell this: 3.8

Though affected by the rollout of RERA in Maharashtra, Pune has seen a large number of new projects being launched in the past year. Unsold units have reduced marginally. Prices have declined but remain moderately high.

Ahmedabad:

Price: Rs 2,850 per ft/ Rs 30,667 per m

12-Month price change: 1%

6-Month price change: 0%

Unsold units: 10,049

1-year change: -50%

Age of inventory (QTRS): 9.7

Quarters needed to sell this: 2.5

The city has the cheapest residential real estate among the eight covered by the study and not seen a big rise in the past 6-12 months. Inventory has reduced sharply in the past year even though there has been a rise in new launches.

Trends in the residential real estate market in 2019

Houses are cheaper

Many cities saw prices fall. In others, the rise in prices was lower than the consumer price inflation. Except in Hyderabad, prices are down in real terms across India.

Lower GST rate

Reducing the GST rate to 1% for affordable housing and 5% for others helped improve buyer perception. But builders hiked prices to compensate for the loss of input tax credit.

Impact of rate cuts

Rate cuts by the RBI have helped but not to the extent they should have. The repo rate was cut by 75 bps but only about 35 bps cut was transmitted to borrowers.

Speculators are out

Given the high cost of capital and a slow rise in prices, speculators are staying away from real estate. Buyers prefer ready-to-move-in properties than those being constructed.

Builders play safe

After the rollout of the RERA, builders are playing safe. Not many new projects are being launched. Instead, builders are focusing on completing their ongoing projects.

News Source: Economic Times, Url: https://bit.ly/2JwYdAq

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