Even an expected pick up in the country’s economic growth in fiscal year 2016, wouldn’t be enough to prod the common man to buy is dream home due to persistently high prices of residential properties, rating agency, India ratings said.
Home prices are unlikely to correct from the current higher levels in 2015-2016 even as inventories are being piled up with investors pumping in money raised through debt and other hybrid instruments, India ratings, formerly known as Fitch India, said.
“Property prices have remained high and unaffordable to end-customers. While economic growth is likely to improve in FY16, property prices might not correct. This could lead to end-customers postponing purchase decisions,” India Ratings said.
Even property consultant CBRE on Tuesday pointed out that housing sales fell by about 30 percent last year in seven major cities due to costlier flats and higher interest rate.
The general slackness in residential sales was primarily triggered by the Affordability Index going down in certain cities, CBRE said.
Property consultant Knight Frank added to the gloom on Thursday when it pointed out in a report that residential launches and sales were at a three-year low during the December quarter across the six tier-I cities— NCR, Mumbai, Kolkata, Bangalore, Chennai and Hyderabad.
According to the Knight Frank report, new launches have fallen by 43% in Mumbai, followed by Hyderabad that saw a 30% drop. NCR saw a 24% in the number of project launches in 2014 compared with 2013, Bengaluru 13%, Pune 26% and Chennai 25%.
Consequently, brokerage do not expect real estate companies to see a revival in home sales. The agency, however, expects a pick-up in demand for both office and retail spaces during fiscal year 2016 “because better economic growth will boost net hiring by IT/ITeS and banking financial services insurance sectors and better customer sentiments will revive the expansion plans of both local and foreign retailers.
According to the assessor, any improvement in demand for houses will depend on “not only a positive change in consumer expectations of economic growth, job and income prospects but also lower property prices”.
On the other hand, even though the demand in the residential space is likely to remain subdued, the companies are likely to continue building up inventory levels using bank funding, the agency said.
At present Bangalore is at the top most position in real estate market of India. Because of the experienced builders and their talent. They are planning to construct the flats, villas or apartments and sell at very reasonable price so that everyone is to have their own home.
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