The residential real estate markets of India’s top eight cities seem to be gaining momentum as sales improved for the fourth straight quarter, according to real estate research firm Liases Foras. 

Sales across Tier I cities grew 9% from a year earlier in the first three months of the financial year 2016-17, according to the firm’s latest quarterly report. Sales, however, fell a tad from the previous quarter.

The report also said that sentiment is still muted across the eight cities and prevailing uncertainty in the market is prompting buyers to exercise caution.

According to the report, the April-June quarter saw a shift in preference toward units priced above Rs 50 lakh. All eight cities cumulatively sold the most units in the price range of Rs 50 lakh to Rs 1 crore, with sales of 26.4 million sq ft. The market share of the affordable segment declined from 10% in the previous quarter to 8% in the latest quarter. 

Pankaj Kapoor, managing director at Liases Foras, said demand in the affordable segment had picked up over the past couple of quarters. But the location of these projects is deterring consumers. Also, there have been fewer new launches in the segment compared with the previous quarter, he said, explaining the reasons for the drop in the segment’s market share. He expects the markets to improve if prices remain stable.

Still, the affordable segment has been the only bright spot in a sector that has been sluggish over the past couple of years. Developers have tried to woo end users with discounts, flexible payment schemes and freebies at a time when investors have deserted the market. 

A slew of developers have come up with products catering to end users and pricing them to suit the middle class, lower middle class and, in some cases, poorer sections of the population. Financial institutions, too, have lately warmed up to the segment. 

To be sure, the revival of the property market is still some time away and analysts believe it will take 10 to 12 months before it comes back on track.

According to the Liases Foras report, while total new launches dropped 35% quarter on quarter, 34% of the new supply was in the price bracket of Rs 50 lakh to 1 crore followed by 33% in Rs 25-50 lakh category.   

Prices across the markets grew 4% on a yearly basis and 2% on a quarterly basis, with Ahmedabad seeing double-digit growth. 

The biggest problem facing the residential real estate market of India is an alarming level of unsold stock. The recent quarter saw a 17% jump in unsold stock on a year on year basis, the report said. Realty markets of the national capital region, Mumbai and surrounding areas and Bangalore continue to be the most inventory-heavy markets among Tier I cities.

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