In a report released by PropEquity, India’s leading real estate data, research and analytics firm on Monday, housing demand crashed across top 8 cities in the fourth quarter of 2016 post demonetisation of Rs 500 and Rs 1000 currency notes by the Reserve Bank of India to curb black money.
Housing demand (absorption) across key cities declined by 31% largely on uncertainty post demonetisation which led to very few transactions materializing in both primary and secondary market.
As expected, new launches fell by 40 per cent as developers across cities are waiting to gauge the true extent of demonetisation impact on real estate before launching any new projects, they now expect market to stabilize post union budget announcement providing some relief especially in the affordable housing segment.
Eight cities were included for the study including Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai.
Also during Q4, 2016, cities with significant inventory overhang have seen slight contraction in prices as developers were compelled to reduce prices to clear off high inventory. NCR cities i.e. Gurgaon & Noida exhibit this trend to a great extent.
“Real estate sector in India, especially housing is going through a critical transition phase post demonetization as transaction activity has slowed down considerably. Many buyers, sellers, banks and private equity investors are waiting for the budget announcement as they expect some major positive news from the govt. to boost real estate sector. In our view, the RERA implementation, Benami Act and further push for smart cities across India will bring major respite to the ailing realty sector. Going forward, developers with good track record, strong financials and low leverage to external debt are expected to bounce back quicker,” Mr. Samir Jasuja, founder and CEO at PropEquity said.
The report further states that average prices of unsold units almost remain stagnant at Rs 6,683 per square feet as buyers and sellers delayed their decisions.
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