lowdown in the housing sector of the once thriving National Capital Region (NCR) is unlikely to recover anytime soon. As unsold homes in the largest property market have piled up to 1.9 lakh as of June, the mood of buyers is turning out to be increasingly unfavourable towards the builders.
According to experts, first-time buyers, the primary customers in NCR’s residential market, are hesitant in investing at the moment.
“First-time buyer, who until recently constituted the major chunk of buyers, have now turned passive. Many have turned to watching from the fence as they are in anticipation of prices to fall owing to the higher number of unsold inventory,” said Amit Modi, vice-president, CREDAI, Western UP.
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“We must understand real-estate sector has very high purchase value. The investment in creating the inventory is also naturally huge. Prices are likely to remain the same for some time, but a potential decline is unlikely.”
Unlike the 2008 realty slowdown which recovered rather quickly, the ongoing one is expected to take a long time for a turnaround. Knight Frank India CMD Shishir Baijal said, “Despite economic scenario strengthening, we are seeing no improvement in the residential market. Going forward, we do not see any improvement until the end of 2015 in terms of sales.” The time could take even longer, some claim, and may eat up much of next year as well. Another major reason is the increasing lack of confidence among the buyers for the builders. “We do not see recovery in housing market as demand is subdued and sales are slow. Sales are happening only where the price points are right and builder has good track record on project delivery. Lack of confidence of consumers in project completion is actually deterring them in taking a decision to buy homes,” said Samantak Das, Chief Economist & Director, Research, Knight Frank India.
Several projects in Noida remain unsold because of the National Green Tribunal order forbidding authorities from registering properties falling within the eco-sensitive zone around the Okhla Bird Sanctuary. Homebuyers in Gurgaon are also hesitant to take possession because of inadequate infrastructure facilities in areas such as Dwarka Expressway. At the macro level, the general sentiment is very negative as there is not much money in the economy at present. The RBI lowered interest rates, but they have not been lowered as much to favour huge investments like buying houses. The budget too hasn’t shown any remarkable change in the tax savings or making home loans cheaper.
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We must understand real-estate sector has very high purchase value. The investment in creating the inventory is also naturally huge