Housing sales decreased by 40 per cent from 2013-14 to 2017, says Anarock
According to the property consultant Anarock, the housing sales declined by 40 per cent in seven major cities last year from the average sales of 2013 and 2014. Experts credit the declining sales to sharp fall in the Delhi-NCR market.
Anarock has recently analyzed housing sales during the last five years in seven cities, which are NCR (national capital region), MMR (Mumbai Metropolitan region), Pune, Kolkata, Hyderabad, Bengaluru and Chennai. After observing the residential market trends over the course of last five years, the property consultant suggested that 2013 and 2014 were the last years where the things still looked vibrant for the sector. Post that period, the sales began plummeting and there seems to be no revival in sight.
According to the company, an average of 3.3 lakh units were sold annually during 2013 and 2014. But, after that the sales dropped during 2015-2016 and an average of 2.7 lakh units were sold annually. In 2017, the housing sales remained at 2,02,800 units, meaning a drop of 40 per cent in sales from 2013-14 to 2017.
Big cities such as NCR and MMR were heavily driven by investor activity recording a massive drop of 68 per cent and 27 percent in average sales. In Delhi-NCR, sales fell to 37,600 in 2017 from average annual sales of 1,16,250 units during 2013-14. With an average sales decline of 17 and 45 per cent, Bangalore and Chennai too are on the radar of investors.
Having witnessed exponential growth due to significant interest from investors and NRIs, the city has also witnessed a decline of 29 per cent in average sales from 2013-14 to 2017. Apart from this, the housing sales in Kolkata dropped by 12 percent in 2013-14 as demand is driven by end users in this city. On the other hand, Hyderabad was the only city which witnessed a sales growth of 32 per cent from average of 2013-14.
The Chairman of Anarock, AnujPuri said “A recurring element in the above findings is investor activity or, to call a spade a spade, speculator activity. While both investors and speculators buy property for profit – as opposed to end-users, who buy homes to live in – the two terms are not interchangeable.” He also said that speculators primarily target short term profits and more often than not lack necessary knowledge about real estate as an asset class and performance of various markets.
According to MrPuri, real estate investors tend to have a better understanding of the market. “Speculation has played havoc with the Indian real estate market, and the fallout of speculative activity in previous years is still being felt today,” he added. The chairman also believes that the new market dynamics and strengthened regulatory environment have more or less eliminated unwholesome dynamic from Indian real estate.
He feels that irrational project delays and diversion of capital have also contributed to the decline in housing sales, which is likely to be reversed with new realty law RERA.