Residential property prices are expected to remain stable as top developers offer easy payment schemes rather than lowering prices, according to Fitch Ratings.
“Homebuilders have been reluctant to reduce prices, and have instead used easy-payment schemes to woo buyers. As a result, there has not been a major price correction in residential real estate since at least 2011, according to the residential price index published by the National Housing Bank of India,” according to a statement issued by Fitch.
The ratings firm has released a report on the Outlook 2016: Indian Home builders. Last week, separate reports from independent consultants pointed out that the sentiment had not improved in the residential market.Fitch expects Indian homebuilders presales to improve by 5-10 per cent over 2016. However, de-leveraging will be gradual because many companies introduced easy-payment schemes in the last 12-18 months that will delay cash payments from buyers, it added.
Fitch said that presales for the seven big homebuilders it tracked rose by 18 per cent in financial year 2015 and four of those companies continued to report strong presales in the six months to end-September 2015.
The average selling price for these companies was 13 per cent higher in the first half of 2016 when compared to FY15, primarily because of the sales mix shifted to higher-end units, according to Fitch.
