The following is the report by Anuj Puri, Chairman & Country Head, JLL India.
The monsoon period usually sees a drop in residential transactions. As sales dip, price movement also slows down. In other words, buyers get more time to make their choice and are momentarily free from the stress of future price rises. The discounts that developers offer during this slow period depend on which phase of the property cycle the market is in. When discounts are offered, they usually take place in a recession period.
New launches in the monsoon quarter are typically lower by 15-25 per cent than the average of new launches in the other three quarters. An exception to this was year 2012, when 11,400 units were launched in the monsoon quarter as against the other quarter’s average of 10,000 units for that year. The reason why 2012 showed different trend is the revision of Mumbai’s DCR and byelaws, with sanctions for new project were either slow in coming, or stopped altogether in earlier 13 months, post revision of rules, more projects were launched.
If a bearish phase in the property cycle coincides with the slow monsoon period, discounts could be significant. However, discounts are usually influenced by the amount of unsold inventory that a developer is saddled with. If he is seeing healthy sales for his project, which would be the case if the project is well-located and more or less rationally priced, he may not offer a discount at all – or only a minimal one.
Sale prices had moved up by 1-2 per cent during the summer quarter and the monsoon quarter in last three years each, so actually the quoted prices have not come down – but as already mentioned, discount offers and freebies are more in monsoon quarter.
In Mumbai, sales during monsoon quarter are usually fewer than average sales for other three quarters of the year. In the recent four years, only year 2012 was an exception where 7600 units were sold in the monsoon quarter as against an average of 6,900 units for the other three quarters. During the years of 2014, 2013 and 2011, average sales in the monsoon were 15 per cent lower than the average sales in the other three quarters. In these years, the monsoon quarter saw an average of 6000 units being sold as against average sales of 7,000 units for the other three quarters.
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