Buried under high debt and inability of the developers to complete and hand over the pending projects well beyond the commitments to the hard-pressed consumers, the troubled housing sector is not witnessing any festive activity this year despite the latest cut in the policy interest rate by the Reserve Bank of India (RBI), an ASSOCHAM survey has said.
Based on the data and information collected from 250 builders in the Delhi-NCR, Mumbai, Bengaluru, Chennai, Kolkata, Ahmedabad, Hyderabad, Pune, Chandigarh and Dehradun, the survey found that the demand for new projects is hard to come while new launches have come to a trickle, marked by lack of consumer confidence and cash deficit of the builders.
Under such a scenario, the demand for new launches, if at all there are, has come down by over 50-60 per cent in Delhi-NCR and Mumbai while it is lesser by about 40-45 per cent in Hyderabad and Chennai. In Bengaluru, the activity has come to a total standstill, first by the demolition drive and then by Cauvery dispute agitation, adds the recent survey.
"Whatever market is there, it is mainly for the end-users and not for investors, sale has been increased for the smaller units (2 BHK & 3 BHK)", reveals the survey.
"Customers are preferably looking for ready to move in property rather than going for under construction property. But not many properties fall in this category", adds the Secretary General Mr. D S Rawat.
The resale or secondary market is also dull this festival season, marked by drop of at least 20-25 in prices this festive season. There is very little resale happening especially in the NCR and surrounding areas. Supply is in excess with private small time builders in the unorganised sector flooding the market with units.
The unsold inventory pressure in NCR region is the highest among all other cities. The NCR residential market still has an estimated 1,70,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey. As per the survey, there are nearly 8-10 million workers engaged in building and other construction activities who face uncertain future if the sector does not revive.
The ticket price 3-bedroom, 2 BHK and single room flats has seen correction by 30% in Noida, 25% in Gurgaon and 15% in some key areas of Delhi, yet the demand stays subdued
All approvals of real estate projects must be accorded in a time bound, accountable and simplifies manner, the ASSOCHAM said suggesting that the process and status of all approvals be made on line so as to bring transparency.
The property analysts have predicted that till March next year the demand for plots, houses and flats may drop by at least 15 to 20%. The housing inventory in the NCR area is huge as a large number of projects are coming up in the peripheral areas, said Mr Rawat.