Housing prices dip by 7% as realtors cut prices to rope in new buyers

Housing prices fell by an average of 7 percent in the first quarter of 2018 as realtors cut property rates to rope in fence sitters even as the number of new project launches jumped by 48 percent across top nine cities with real estate developers aligning themselves to RERA regulations and migrating to GST compliances,  says a new report by real estate research and analytics firm PropEquity.

After several quarters, the first quarter of 2018 saw a significant jump in new launches as most of the developers were able to acclimatize themselves with RERA regulations and migration to GST compliances. New launches jumped 48 percent across top 9 cities in the first quarter of 2018 from 17,550 units to 25,970 units, it says.

However, weighted average prices in the quarter fell 7 percent from Rs 6,762 per sq ft to Rs 6,260 per sq ft suggesting aggressive pricing by the developers to ignite homebuyers demand.

“We expected realty market to start stabilising from the first quarter onwards and this is what we are witnessing now. With this spurt of new launches in the first quarter of 2018, we expect the trend to continue with developers focussing on mid-segment and affordable housing segment to take advantage of PMAY interest subsidy benefits. We continue to expect ready or about to be completed units to be sold more quickly than the newly launched units,,” says Samir Jasuja, founder and CEO at PropEquity.

The unsold inventory dipped 2 percent to 5.95 lakh units from 6.08 lakh units due to increased buyers interest. This was evident from an 8 percent spike in units absorption to 40,694 units from 37,555 units in the quarter.

Nine cities that were included for the study included Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai.

Gurgaon witnessed growth in the first quarter as approximately 3,411 units were launched during the period, a jump of 156 percent over quarter-on-quarter.

However, absorption fell by 60 percent as customers delayed their buying decisions for the next fiscal, the report says.

In Noida, few projects were launched and total units launched stood at 240, a decline of 55 percent quarter-on-quarter. However, absorption increased on QoQ (31%) basis as developers were clearing their earlier launched stock by offering discounts and offers, it says. The weighted average price stood at Rs 5,585 per sq ft, an increase of 3 percent. New launches witnessed drop on both QoQ (18%) and Y-o-Y (49%) basis.

Bengaluru gained traction in the first quarter as approximately 9,557 units were launched during the period, a jump of 173 per cent over quarter-on-quarter. Absorption also saw a change on Q-o-Q basis and increased by 45 per cent indicating an uptick in demand as developers ramped up their marketing and sales activities, the report adds.