Property sales across top six Indian cities declined 8 per cent in the fourth quarter ended March 31, 2015 over the year-ago period, according to latest data released by real estate consultancy firm Liases Foras. This shows demand has not picked up despite a positive vibe in the market as growth gathers pace in the economy.
To be fair, sales did sport a 2 per cent rise sequentially over the previous quarter ended December 2014 but the realty market sees seasonal swings in property purchase decisions and hence is best compared year on year.
Hyderabad recorded highest sales growth in Q4 at 46 per cent (5.49 million sq ft) while Chennai saw a steep decline of 40 per cent (5.27 million sq ft) on a yearly basis. The huge jump in the sales figure of Hyderabad can be attributed to the political stability in the region after the creation of Telangana. It is expected to take a steadier path with time.
Other big cities like Delhi National Capital Region (Delhi NCR) saw sales decline by more than a third while Mumbai Metropolitan region (MMR) saw sales rising 8 per cent in Q4 compared with the same period a year ago.
Delhi NCR is the top market in the country by volumes while MMR is the largest market by value of properties.
“Given the slowdown in sales, developers are coming up with smaller projects at lesser price points. The exuberance in the market has gone away and price correction is the only way to bring demand back in the market,” said Pankaj Kapoor, managing director, Liases Foras.
Except North India, he expects real estate market to see recovery in the coming quarters but states there will be downward pressure on prices across markets.
On the price front, Delhi NCR is the only city which has witnessed a drop in prices, at 2 per cent year on year. Overall, the real estate market saw a marginal price appreciation of 1 per cent in Q4 FY15 compared with the same period last year.
Slow sales have taken the inventory level up 2.48 per cent to 919 million sq ft as of March 31, 2015. Delhi NCR remains at the top when it comes to unsold stock, over a third of the total, while Pune, Hyderabad and Chennai weigh lighter on the inventory front.
At this pace of sales, the real estate markets will take 39 months to clear the unsold stock. A healthy market maintains around 8-12 months of inventory.
MMR sees record launches
Mumbai Metropolitan Region (MMR) witnessed a huge level of launches with 18.16 million sq ft of new supply in Q4 FY15, according to the report. This is the second highest launch registered by the city in a quarter next to Q1 FY11. It has posted healthy sales numbers among its peers and has seen sales going up by 25 per cent quarter on quarter and 8 per cent over the year.
(Edited by Joby Puthuparampil Johnson)