Property consultancy Knight Frank India said today 2017 had been a mixed bag for the Hyderabad real estate market with launches in the residential market hitting a "new low", but sales in the residential space were firm. "Unlike the conventional narrative, developers cut down prices to offload their unsold inventory", Dr. Samantak Das, chief economist & national director - Research said. The base price in Mumbai has declined 5%, which translates into an effective price benefit of as much as 12% for buyers once incentives such as a waiver on stamp duty are considered, he wrote. Prime Minister Narendra Modi is spearheading a campaign to wipe out the shadow economy, boost tax compliance and widen the revenue base.
"By the end of 2017, the residential sector had shrunk to a fraction of its size in less than a decade".
Das said that price correction downwards would be more pronounced in the coming months.
"Select markets wherein Rera has matured, have seen developers re-launch projects at attractive prices which led to an uptick in sales in 2017".
But the report said that while residential sales in entire 2017 dropped by 6 per cent, H2 2017 recorded 21 per cent surge Year on Year (YoY) in comparison to the demonetisation-hit H2 2016.
The Knight Frank report released Wednesday said prices in other Indian cities had reduced too. That's great news for homebuyers because average asking prices in the Chennai residential real estate market have come down by 3% since 2016.
The number of new launches in Mumbai Metropolitan Region (MMR) has seen an 83 percent fall from its peak of 1.38 lakh flats in 2010 to a mere 23,253 flats in 2017.
Homebuyers have a narrow window of opportunity though, because the West Bengal Housing Industry Regulation Bill (HIRA) 2017, already passed by the State Assembly previous year, is expected to be notified soon. There is no data available to suggest that prices have dropped to this extent of 12-13 per cent as suggested in the report taking into discounting and quoted prices but increased holding and financing costs in addition to increased wages and regulatory costs suggest that this is a bottom and once the unsold stock is down to manageable proportions the prices in fact might increase post this quarter.
Unsold inventory levels had peaked in 2014 at 0.72 million units.
Meanwhile, Chennai city's office space market also plummeted as the share of largest office space consumer, IT and ITeS sectors, halved from 43 percent in second half of 2016 to 25 percent in second half of 2017. Home affordability remains the highest in Mumbai at 7.8 times a family's annual income, compared to 11 times annual income in 2010.