India's housing market is likely to struggle throughout 2020 as sluggish demand and a weak economic outlook overpower recent government measures efforts to boost activity, a Reuters poll of market experts found.
House prices rose 5.7% on average in 2018, the weakest since comparable records began in 2010, and data available for last year suggest a much weaker market despite a rapid-fire succession of interest rate cuts from the Reserve Bank of India.
The Feb 19-March 2 Reuters poll of 17 property analysts showed average house prices predicted to rise 2.0% this year and 2.5% in 2021.
That is well below 3.0% and 4.25% expected in a poll three months ago and only about a third of the latest reported rate of consumer price inflation.
"As long as housing demand remains bereft of major booster shots, the performance will remain patchy in the near-term," said Anuj Puri, chairman at ANAROCK Property Consultants in Mumbai.
Project delays due to the recent liquidity crisis meant fewer people were buying houses, he said. "There is a dire need to address this concern immediately."
Asia's third-largest economy expanded at its slowest pace in more than six years in the last three months of 2019, with further deceleration expected from the global coronavirus outbreak. That too will not help a market stuck in low gear.
All but one of the 12 analysts who answered an additional question said the latest union budget will have no impact on housing market activity.
And all respondents said a prolonged period of sub-par housing market activity followed by a recovery is more likely over the coming year. None chose 'an acceleration' or 'a slowdown' from the options provided.
"While green shoots are visible, the sector is in for a further period of strife with slowly improving sales and the liquidity squeeze really turning on the screws on the developers, who are struggling with project completion deadlines," said Rohan Sharma, head of research at Cushman & Wakefield India, based in Delhi.
Mumbai, Delhi and the National Capital Region were the most over-valued, according to respondents in the poll. But Bengaluru and Chennai were rated as fairly priced - a view held by property analysts since Reuters began surveying the market in Nov 2018.
While expected house price rises in most cities over the next two years remained largely unchanged from the previous poll, prices in Bengaluru were predicted to rise by twice as much as analysts expected just three months ago.
But that expected rate - 2.50% this year and 3.75% next - is still very slow by recent standards before the current slowdown.