Home sales drop across cities

Metros lead the drop, but drag also seen in smaller places, with high prices, interest rates & job gloom.

Sale of residential properties has dropped by 18-28 per cent in major metros, hit by dampened demand as a combination of higher property prices, rising home loan rates, and job cuts take a toll.

Data released by real estate research firm Liases Foras for Delhi, Mumbai and Bangalore indicates this trend. Bangalore, for instance, considered one of India’s fastest growing and most crowded metros, shows a 21 per cent drop in residential area sold in April-September, compared to last year.

“Residential sales across cities are falling. After a record jump in Delhi and Mumbai prices, tier-II cities also got a fillip, but six to 12 months later, in cities like Pune and Chennai, too, sales are now on a downward slide with the price increase,” said Sanjay Dutt, chief executive of the business division of international property consultants Jones Lang LaSalle India. “Inflation and interest rates are largely responsible for denting sales. In the present environment, high priced apartments are not selling; only projects in the mid-income segment are selling”.

Tier-II also hit

A number of realtors launched projects in the high-end segment after the realty market upturn in March 2009, as margins here are higher at 45-60 per cent compared to 20-35 per cent in the mid-income segment.

Ahmedabad, Hyderabad, Chennai, Goa, Mohali and other cities — called Tier-2 by marketers — saw an influx of bigger listed developers launching projects at that time. They have either slowed the pace of their launches or exited those locations due to a slowing in sales.

"All across the country, the residential sales numbers for the past two-three months have come down,” said Gulam Zia, national director, research and advisory services, at Knight Frank India, another property consultancy. “Volume dips in most cities like Ahmedabad, Chennai, Pune and Hyderabad has been in the range of 15-20 per cent, whereas Delhi has seen a fall of 20-25 per cent and Mumbai sales have plummeted by 60-70 per cent."

But, not down for all

Not all developers second these findings. Venkat R Narayana, chief financial officer of the Prestige Group, a Bangalore-based listed real estate company, said, “The Bangalore market in general has seen very good sales momentum and products in the affordable and mid-income category in the range of Rs 2,800-4,000 per sq ft are doing well. In the first six months, we have recorded new sales worth Rs 1,000 crore and in the next two quarters, we will be launching two-three new projects in the residential segment, of which one will be in Chennai.”

In Delhi, sales dropped by 18.7 per cent in April-September this year, according to the Liases Foras data. Home sales in Mumbai slowed the most, falling almost a third. Forecasts on home sales are also not good.

“Price corrections have begun in the Mumbai market, though it has not happened as much as people were expecting. In other metro cities also, prices had skyrocketed. The global economic outlook is weak, with retrenchments in the financial sector and possible job cuts in others. We expect a downward curve in sales to continue, unless interest rates and prices come down,” said Pankaj Kapoor, founder and chairman of Liases Foras.

Realtors are pinning their hopes on the mid-level segment. “In Noida, the court has given directions and after that, we have launched a mixed-use development project last week. We are hopeful that sales will continue in the mid-income segment,” said R K Arora, chairman and managing director, Supertech, one of the largest land holders in Noida.

Source: http://www.business-standard.com/india/news/home-sales-drop-across-cities/458239/

Property prices begins to move south : Makaan.com

Property transactions in major Indian cities were down by 20-40% for the past 6-8 months owing to high property prices & home loan interest rates. Buyers adopted a wait and watch approach. With unsold inventory piling up in all major cities, it was widely expected that property prices will come down. The latest release of Makaan.com Property Index (MPI) confirms this trend with property prices in some Indian cities starting to move south-wards.

As per the October 2011 MPI released today, the national index stood at 1483 compared with 1495 in the corresponding month last quarter, this is a drop of 0.8%. The fall in national index is attributed to the softening of property prices in key cities like Hyderabad, Bangalore, Mumbai & Ahmedabad, which fell by 21.6%, -7.8%, -5.6% and -2.8% respectively over the last three months. Giving support to the index were the property price movements in cities of Kolkata, Pune, Chennai and Delhi NCR that rose by 17.4%, 12.4%, 9.1% and 4.2% respectively over the last three months.

The abnormal fall in Hyderabad can be attributed to the ongoing agitation for a separate state of Talengana which is hampering the real estate activity in the city. The fall in other cities seems to be on account of low transaction & high unsold inventory. It will be interesting to note if this is just a short term price correction or the prices will continue to move southwards even in the coming months. Whatever said and done it is a good news for the home buyers who stand to be the ultimate beneficiary.

On an annualized basis, the property index of all the main cities continue to show a positive trend. If one looks at the year on year trend and compare the property prices of October 2011 Vs October 2010, we observe that the national index have appreciated by 26.8%. Giving support to the national index are price appreciation in Pune (38.8%), Bangalore (33.1%), Delhi NCR (25%), Mumbai (20.2%), Ahmedabad (19.7%), Hyderabad (16.1%) and Kolkata (11.7%).

Commenting on the findings Aditya Verma, EVP & COO, Makaan.com says, “Indian market is undergoing a short term correction in property prices which is actually healthy for the market. This will lead to some revival of buying interest. We expect the prices to remain range bound over the medium term (6-9 months). A meaningful revival is expected only by July-Sept 2012 when price correction will be additionally supported by softening of home loan rates.”

Makaan.com Property Index (MPI) is part of the knowledge division of Makaan.com called MakaanIQ that has been bringing out property intelligence & research reports for the benefit of homebuyers and real estate industry. MakaanIQ was the first to predict a shift towards affordable housing in first half of 2008. The Index is another attempt at bringing objective information and analysis for the benefit of the Industry and the country.

This index is based on minimum database size of 20,000 data points every month and the analysis has been drawn over a period starting Jan’09. The complex algorithm takes into account the property prices as base and then factors in the demand and supply of residential properties for each of the cities covered by it. Care has been taken to give weight age to cities in line with the size of underlying property market. The prices of properties were obtained across micro-markets through property listings on the website as well as Makaan.com’s nationwide sales force.

Source: http://www.indiainfoline.com/Markets/News/Property-prices-begins-to-move-south-Makaan.com/5307289218