Despite the recent rate cut of 50 bps by Reserve Bank of India (RBI) and great offers made by developers on the festive season, the investment in the property have remained lukewarm in and around the NCR region due to lack of confidence in state of economy, delay in project execution, lack of fresh employment generation and overall slowdown, reveals the ASSOCHAM recent study.
“The sentiment in the housing market is really at a low key. The prices have almost crashed but they are still un-affordable. Be it Rohini, Dwarka, South Delhi, Noida, Gurgaon, the prices of property are down by 25-30% as compared to the last two years.”, said Mr. D S Rawat, Secretary General ASSOCHAM while releasing the survey.
The ASSOCHAM conducted a random survey of nearly 125 real estate developers in Delhi-NCR. The survey reveals that demand for buying property have decreased by over 30% over the last year.
As per the ASSOCHAM paper, inordinate delays in getting necessary approvals from multiple regulations and authorities result in cost and times overruns. The resale or secondary market is also dull this festival season as there is very little resale going especially in the NCR and surrounding areas, adds the survey.
According to survey, the residential market has witnessed a steep decline by 25-30% in new launches as well as demand resulting a significant shrinkage. The unsold inventory pressure in NCR region is the highest among all other cities.
According to the majority of real estate developers in NCR regions said, about 62% of the unsold real estate in NCR is in areas which are currently uninhabitable. The problem has been confounded by delays in regulatory clearances and litigations, points out the survey.
The NCR residential market still has an estimated 1,70,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey. As per the survey, there are nearly 8.5 million workers engaged in building and other construction activities in India.
The ticket price 3-bedroom, 2 BHK and single room flats has seen correction by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi but still, the demand stays subdued, adds the survey.
Modular kitchen, LED televisions and air conditioners are among the most common freebies on offer this Diwali. Some developers offered hefty discounts to the basic sale price for early investors. Many others warned of sharp revision in property rates post Diwali. However, the lure of freebies failed to charm home buyers, the survey noted.
Majority of the developers have complained that inordinate delays in getting necessary approvals from multiple regulations and authorities resulted in cost and time overruns.
To counter the slump in sales, developers have been offering some discounts and incentives. But even these steps have failed to attract buyers. The sales continued to remain low despite developers offering attractive pricing schemes and discounts to attract buyers.
Festive season considered to be auspicious for home buying and offering bargains, contributes over 30 percent of annual realty sales. But with the prevailing depressed market sentiment, the sector has been witnessing muted sales since the festive season of 2015, recording 30-35 percent lower sales compared to the healthy period of 2010-11.
Besides offering standard freebies like parking and club facilities, modular kitchens, air-conditioners, developers are taking just 5-10 percent of the house price as booking amount and that too in installments, with the balance payment on possession.