Track2Realty: Housing sales across India’s seven leading cities declined by approximately 30% on an annual basis by the end of 2014—according to the latest CBRE report, India Residential Market View – H2 2014. The general decline in the housing market was particularly steep in the Delhi National Capital Region (NCR), signaling the need for property prices to get rationalized in tune with average per capita income rates of home buyers.
Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, “The housing market across the country in 2014 was fairly slow. This was largely due to high price points, sticky interest rates and cautious home buyer sentiments. The recent instance of monetary easing by the Reserve Bank of India, however, is expected to provide a positive boost to the sector. It was an important step in improving home buyer sentiments, and hopefully, with expected reduction in mortgage rates, residential sales will begin to improve.”
Keeping in mind subdued home buyer sentiments, many developers in major markets abstained from launching new projects, and directed their focus on reducing existing inventory instead. Consequently, new supply addition declined by approximately 25% y-o-y, with rationalization reported during the second half of the year. This was particularly prevalent in the markets of Delhi NCR, Bangalore, Chennai and Pune. Despite the decline in new project launches, however, tier I cities continued to dominate the residential landscape, with Delhi NCR, Mumbai and Bangalore accounting for about 70% of the entire supply addition of housing units during the year.
As per the CBRE report, the largest quantum of new residential project launches was observed in the mid-end segment, catering to the rising demand for affordable housing in the country. This segment also attracted a healthy increase in enquiries from home buyers, given the smaller ticket sizes and improving connectivity in the suburban and peripheral regions of leading cities.
“With improving economic growth and positive consumer confidence, further rate cuts are anticipated from the Central Bank during 2015. This will hopefully enable market recovery and strengthen growth prospects for India’s housing sector in 2015 and beyond,” added Magazine.
Mumbai was one of the few markets in the second half of 2014 to see housing sales inch up marginally by about 7% over H1 2014. Prices in the city’s premium / luxury segment saw limited appreciation in the range of 1–4% in the Eastern, Western and Extended Western Suburbs. Meanwhile, a steady supply of housing units and strong demand from home buyers led to a price rise of nearly 12–16% in the high-end / mid-end segment of the Eastern Suburbs and Central Mumbai.
