DELHI: In what could soon bring some cheer to home buyers, property prices are expected to fall 10-15 per cent in select markets over the next few months, as developers are trying to cut down on inventory and push sales.
According to an expert tracking the sector, by Diwali 2014, the prices could correct 10-15 per cent in the National Capital Region (NCR), Mumbai and other similar high-end markets where rates have surged in recent times.
“Price correction is happening in micromarkets. Even in the high-end ones, such as Delhi-NCR and Mumbai, prices are coming down. But, the overall market is almost flat and launch of new projects is also low,” says Anshuman Magazine, chairman and managing director, CBRE South Asia.
However, in the secondary market, prices have come down on the paper but people are actually holding on, he adds.
Estimates suggest, since previous Diwali, prices have either remained stagnant or shown minor increases (in some prominent markets). Real estate prices for the quarter ended September 2013 are not available yet. But, according to data as at the end of the June quarter, prices in cities like Gurgaon and Mumbai (South Central) rose 10.29 per cent and 4.65 per cent, respectively, from those in October-December 2012. Cushman & Wakefield data show, in many markets, such as South Delhi, Bangalore and Chennai, prices remained largely unchanged during the period. But a recent set of data from National Housing Bank (NHB), based on a study of transactions with banks and housing finance firms, reveals that of the 26 cities surveyed, prices in 22 fell in the June quarter when compared with the previous quarter.
NHB Chairman & Managing Director R V Verma says: “We have seen a price decline across cities; it was due for some time. This shows developers are now prepared to take some cuts in their margins, despite a rise in input cost. This will enable them to clear their huge inventory, have liquidity and increase demand.”
Ashutosh Limaye, head (research & real estate intelligence service), Jones Lang Lasalle, also expects a price correction going forward. But he refrains from giving out numbers. “We expect price corrections to happen. These will be city- and area-specific… as a result of the high inventory level, the ability of the market to cling on to current prices is under severe stress.”
“The prices are higher than those last year but sales have fallen. We are in the middle of the festive season... so it will not be right to draw a comparison with last Diwali yet,” Limaye adds.
According to a JLL report, Mumbai currently has an inventory of close to 48 months, while Delhi has that of 23 months and Bangalore of 25. These are above the comfortable level of 14-15 months. Real estate firms, battling a slowdown, are betting big on festive-season demand for a push to the sector. Also, for the past few months, the sector has roped in celebrities like Deepika Padukone, Aishwarya Rai and Shah Rukh Khan to endorse real estate projects across the country.
For January-July this year, the number of new launches has come down drastically — between 38 per cent and 59 per cent — in key markets like Gurgaon, Navi Mumbai, Pune, Noida and Kolkata. The highest drop, of 59.5 per cent, was seen in Noida. Here, only 5,994 units were launched till July this year, compared with 14,797 during the same period last year. In Gurgaon, launches dipped 38 per cent to 11,955 till July, from 19,310 in the corresponding period of 2012.
Similarly, launches were down 40.3 per cent in Navi Mumbai, 46.6 per cent in Pune and 41.6 per cent in Kolkata, according to data by real estate research firm PropEquity. Overall, launches in 15 major cities till July this year were down 15.8 per cent to 188,145 units across segments.