Fitch expects residential property prices to stablise

Fitch Ratings has said that it expected residential property prices to remain stable as builders are option to offer easy payment solutions rather than lowering prices. This was indicated by Fitch Ratings on Monday in a report on the ‘Outlook 2016: Indian Homebuilders.

Residential property prices should remain resilient in 2016, supported by improving demand. Homebuilders have been reluctant to reduce prices, and have instead used easy-payment schemes to woo buyers,” said Fitch in its report.. As a result, there has not been a major price correction in residential real estate since at least 2011, shows residential price index published by the National Housing Bank of India.

Fitch Ratings said that it expects home builders‘ pre-sales to improve by 5-10% over 2016. The rating company expects deleveraging of builders to be gradual because many companies introduced easy-payment schemes in the last 12-18 months that will delay cash payments from buyers.

Pre-sales rose by 18% in the financial year ending March 2015 for the seven large homebuilders that Fitch has tracked in this report. Four of these companies continued to report strong presales in the six months to end-September 2015. The average selling price for the sample of companies included in Fitch’s report in first half of this fiscal year was 13% higher than in comparable period of 2015, but primarily because the sales mix shifted to higher-end units.

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