New Delhi: Defying expectations, the festive season this year has failed to evoke the desired demand in the residential housing space and the industry continues to face issues of oversupply, high unsold inventory and a decline in prices. The quarterly House Price Index (HPI) for last four years compiled by the Reserve Bank of India for ten major cities based on actual registered transactions shows a decline in growth rate of housing price rise in the financial year ended March 2014 as a result of weakening demand.
The data however shows that the decline has not been uniform across categories. If the high-end and the luxury housing segment saw the housing price rise by around 20 per cent in 2013-14, the growth in the small house segment narrowed to 2.9 per cent in the quarter ended March 2014. Rising inventory and softening real estate prices however, open up an opportunity for the prospective home buyers to go for a good bargain in the housing market according to market experts.
The HPI index prepared by RBI shows that in the two-year period between April 2011 and March 2013 it was the small house category that led to the price rise. While the absolute price rise for the small housing segment during that period stood at 74 per cent, that for the medium and large segment rose by 50 and 41 per cent respectively. The prices however stabilised in the small segment as they rose by only 3 per cent in 2013-14 as against a 10 per cent and 19 per cent rise in the medium and the large segments. While the developers held on to high prices till 2013, that seems to be now crumbling under pressure from low demand and rising inventory.
A report released by Knight Frank shows that new launches in the first half of 2014 dropped by 32 per cent over that of H1 2013 and the sales volume in that period dropped 27 per cent. The report pointed out that the unsold inventory for the Mumbai Metropolitan Region and the National Capital Region at the end of June 2014 stood at 2,13,742 units and 1,67,000 units respectively.
Anshuman Magazine, CMD, CB Richard Ellis said that the housing demand across leading cities remained subdued in the first half of this calendar on account of ruling high prices