Real Estate slowdown

Q: 5 factors that can bring back the real estate markets across India if developers show appropriate construction progress in order to avoid fear of delays in completion.

Ananya,

27th August 2015

Real estate News in Mumbai

mumbai real estate

delhi-ncr real estate

real estate slowdown

decline in sales

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Replies (4)

With above factors that are representing a positive picture for the economy and the impact on consumer confidence is positive. This is confirm by various market reports. But the rising consumer confidence has not translated into higher demand for apartments.

Debanjan, Noida

27th August 2015

Comment

On the other hand, RBI's data on the growth in home loans as well as the growth in credit to the construction sector give out healthy credit drift. Home loans have grown at a 17% y-o-y average over the last 2 yrs whereas bank credit given to the construction sector grew at 22% y-o-y one of the highest levels of all sectors.

Manilal Patel, Mumbai

27th August 2015

Comment

And we can not ignore the interest rate, CPI inflation has dropped rapidly by around 3% in the last 2 yrs. and it now stands at 5% (as of May 2015), which is well within the comfort zone defined by the RBI. As a result, RBI has responded with 3 rate cuts (totalling 75 basis points) since the start of 2015, with a possibility of more rate cuts in the near time.

Ananya,

27th August 2015

The slowdown movement has been noticed in 7 leading metros with the situation particularly bad in markets such as Delhi-NCR, where the sales rate has declined by 10%. In spite of, a big fall in Pune, Hyderabad and Kolkata, the sales rates of these cities still remain in double digits at 12-13%. Mumbai's fall was average.

Sishir,

27th August 2015

Comment

Hi Sishir and Mathur,
Here are 5 comprehensive factors that impact real estate markets, including country's GDP and housing supply, dynamics credit availability, interest rates, employment scene and consumer confidence. These factors indicate the formula for bringing back the realty markets could lie within the reach of builders and policymakers.

Ananya,

27th August 2015

Can you tell me what is the current position of India's GDP and employment?

Sishir,

27th August 2015

Well Sishir,
India's GDP has been rising consistently over the last 2 yrs. from 6.9% y-o-y growth in fiscal year 2013-14 to 7.3% in 2014-15, and is expected to be over 7.5% in 2015-16. Also, the monthly reports of leading recruitment firms in India suggest that hiring activity has picked up speed, particularly in the last year.

Ananya,

27th August 2015

Yes, it seems to me that the real estate slowdown in India appears to be taking much longer to get stable. The sector has been going through a tough phase with inventories piling up and sales decline. Declining consumer trust in the realty sector can be bring back if developers show proper construction progress in order to avoid fear of delays in completion.

Sishir,

27th August 2015

Comment

Right Sishir,
And developers have shown caution with controlled launches. In spite of that, if market trends were expected before such moves have happened earlier. Sales of residential units declined significantly over the last two years, particularly in the initial periods.

N.Mathur, Delhi-NCR

27th August 2015