23, January, 2018
MUMBAI: Residential property markets across India's top 30 cities have shrugged off the impact of de-monetization and absorbed the short-term blow of several regulatory changes aimed at formalizing the real-estate sector.
In the quarter ended September, these property markets, including tier I and II cities, started showing initial signs of returning to normalcy as sales registered the best performance in five quarters, as per the latest performance data available for these property markets.
Based on sales volumes, 22 of the top 30 markets were either hovering around their five-quarter best or bettered their previous peaks during the September quarter. All cities have bounced back from the lows witnessed around demonetization, showed data from Liases Foras Real Estate Rating & Research.
The performance in this quarter assumes significance as two key reform measures were implemented around this time. In May, the government implemented the much-awaited Real Estate (Regulation & Development) act, 2016 and the country transitioned into the new indirect tax regime with the rollout of Goods & Services Tax (GST) on July 1.
"Despite two major interventions of RERA and GST implementation, the broad property market across the country had not only held itself but has shown its best performance in five quarters. This clearly indicates that the worst is over and that the markets are poised for a big leap," said Pankaj Kapoor, MD of Liases Foras Real Estate Rating & Research.
In the quarter ended September, sales volume in tier I cities such as Mumbai, National Capital Region (NCR), Pune, Bengaluru, Hyderabad, and Ahmedabad were at their five-quarter best levels. In tier II cities, Vadodara, Bhubaneswar, Bhopal, Nashik, Kanpur, Thiruvananthapuram, Mangalore, and Rajkot have also recorded their best sales volume in the last five quarters, the data showed.
Besides affordable pricing, improving consumer confidence due to the implementation of RERA and various other government incentives for low-income group housing have worked in favor of smaller cities. Coupled with the demonetization move, both RERA and GST implementation will help improve compliance and transparency levels within the industry and this is expected to boost homebuyers' confidence.
In addition to sales volumes, the broader markets, including smaller cities have seen prices moving above the lower levels touched during the demonetization quarter of October-December.
However, they continue to remain sluggish and are yet to go back to pre-demonetisation levels.
According to Desu, the response to Brigade's residential projects at Mysore, Mangalore, and Chikmagalur has been robust and based on this; the company has gained the confidence to launch two more residential projects in Mysore by March end.
Both Talwar and Desu believe that the market will remain in buyers' favor as prices are not likely to move up anytime soon and will continue to be at the moderate level, helping end-users take advantage of moderate prices.