Biggest drop in housing prices in a decade

Residential real estate prices drop 3% in top cities

Chennai: Joining the "whining" party of Credai and Builders' Association of India, global real estate consultant and researcher firm Knight Frank has attributed the recent plunge (second half of 2017) in real estate industry to enactment of Real Estate (Regulation and Development) Act and Goods and Service tax Act.

Except Ahmedabad and Hyderabad, other major markets recorded a fall in prices ranging from 2% to 7%, the report says.

Presenting a comprehensive analysis of residential and office market performance of MMR for the period July-December 2017 (H2 2017), Knight Frank India launched the eighth edition of its half yearly report today.

However, since developers are not launching new projects rapidly, the impact on unsold stock has been positive. Piled up inventory, lack of consumer confidence due to litigations and infrastructure delays combined with the introduction of RERA and GST together caused a steep 56% drop in the number of units launched previous year (y-o-y).

Das said that "in terms of sales, the Mumbai market recorded 19% uptick in H2 2017 over the demonetisation-hit same period a year ago, however overall sales volumes reflect a declining pattern".


According to Paramvir Singh Paul, Knight Frank Pune branch director, Maharashtra was the only state that notified RERA rules in a timely manner and subsequently implemented it across the state. "Once the RERA get streamlined, the residential market will turn into a consumer-oriented market", the research team said. Flats are effectively being offered at a discount of 11-12 percent on the original price. According to Knight Frank India, once HIRA is set up, "we expect real estate developers to consolidate and business models to evolve, which should revitalise the residential segment". The age of unsold inventory is a matter of concern, said Krishnan.

As per the report new office space supply hit double digits for the first time since 2012, 76% higher YOY. Home affordability remains the highest in Mumbai at 7.8 times a family's annual income, compared to 11 times annual income in 2010.

Housing sales and launches stood at 40,005 units and 26,734 units, respectively.

According to a report released by Knight Frank, political instability, recurring natural calamities and gloom in market sentiments stagnated signs of recovery noticed in the first half of the 2017 and Chennai residential real estate market recorded new lows in terms of new launches and sales of residential units during the second half of 2017. This has ensured a severe contraction in the Pune residential market. "The pace at which developers align themselves to the new regulatory norms and launch new products in the right ticket sizes that appeal to the homebuyer's interests, will determine the trajectory of the market going forward".

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