MUMBAI: Despite recovery in market conditions and sentiment, this festive season has failed to bring in cheers to the real estate industry as home buyers continue to remain cautious, according to industry experts.
Festive season is generally considered as the most important time for the realty sector as it records the highest number of sales, which is nearly 20-25 per cent more than non-festive period.
"The real estate industry has always witnessed a rise in sales during the festive season especially on the back of freebies and incentives offered by the developers. However, despite recovery, there is no improvement in sales during the festive season," IndiaProperty.com Chief Executive Ganesh Vasudevan told PTI here today.
He said, "the demand from property buyers has increased compared to the last few quarters. This is witnessed from the number of enquiries we are receiving. But this is not translating into actual transactions as buyers have adopted a wait and watch approach."
According to Jones Lang LaSalle India Chairman and Country Head Anuj Puri, though there is a recovery in sentiment, the events that have catalysed it - namely the new government at the Centre and "its pro-business policies favouring realty"- will need more time to bring their benefits to bear on the market.
"While demand exists, it is still held in abeyance by various economic factors, including the natural lag between the announcement and implementation of the government policy catalysts," he said.
Likewise, the Reserve Bank has held on to current interest rates in favour of safeguarding against further inflationary trends.
"It will take several more months for the market to get into convincing forward momentum again.. the festive season did not bring the kind of momentum that was hoped for," Puri added.
"There is also an expectation that home loan rates may come down in the next 2-3 quarters as the government is taking initiatives to tame inflation. If the interest rates come down, we will see a surge in sales from the second or third quarter of 2015," Vasudevan noted.
Developers, on the other hand, have been addressing the situation by offering selective discounts and incentives, the success of which has varied across cities and locations. Those with greater holding power continue to wait for the market to pick up so that sales velocity will accelerate, Puri said.
"During the festive season, developers generally launch new projects as well as offer various incentives to attract buyers. However, over the last few quarters, there has been a slowdown in new launches as the inventory levels itself are very high," Samruddhi Realty Chief Executive Madhusudan K said.
He further said developers are currently concentrating on clearing the inventory and are offering discounts and other incentives to attract buyers.