The festival season holds out hope for the real estate industry as demand from end users increases in many markets. Experts are estimating growth of up to 15 per cent in home sales from the same period last year.
“There has been no major price appreciation in the last one year and developers are offering 15-20 per cent discounts, making it a net gain of about 25 per cent in prices for buyers,” said the chief executive of a Mumbai-based real estate company.
The price reduction seems to be the primary reason for the consumer pull.
Compared to last year, growth in sales would be 10-15 per cent, depending upon the market, and it showed the curve had started to move up, another expert said. “We should not expect the high growth numbers of the previous boom. Consecutive years of growth will help the industry in recovering from the phase it is in. This year, we expect good numbers,” he added.
Sanjaya Gupta, managing director, PNB Housing Finance, said Bengaluru, Pune, Hyderabad and the suburbs of Mumbai had seen increased activity. “Last week, we were pleasantly surprised to hear of transactions in south Delhi, with ten high-end floors being sold. We hope it is a harbinger of better sentiment. The festival season was flat for three years,” Gupta pointed out.
Despite new launches dwindling in major cities like Delhi NCR, Bengaluru, and the Mumbai Metropolitan Region, expectations are high this time because developers, focussed on clearing inventory, are offering ready-to-move in houses in 6-12 months. This improves the confidence of buyers accustomed to seeing delivery commitments being flouted.
According to a real estate consultancy, the number of new launches in Delhi-NCR, MMR and Bengaluru has come down by over 61 per cent to 87,298 dwelling units during January-September from 227,211 in the same period of 2012.
Pankaj Kapoor, managing director, Liases Foras, said there would be a significant improvement in sales this festival season because interest rates had come down, prices had not gone up, and developers were offering discounts.
Also, over the year, incomes of working couples have risen by 10-15 per cent. “Affordability has improved in most markets, including the NCR and Mumbai,” Kapoor said.
The inventory level for the first quarter of 2015-16 rose 24 per cent to 41 months across eight major cities. The NCR had 68 months of inventory, MMR 45 months and Bangalore 30 months, according to Liases Foras. An efficient housing market maintains 8-12 months of inventory.
Ashutosh Limaye, national director, research, JLL India, also expects this year to be better than the last. “The biggest plus point in this season is the price, which is very attractive for buyers,” he said and added there was scope of negotiation.
The festival season from October to December contributes 30-40 per cent of total house sales but over the last two years very little activity has been recorded during the season.