The festive season could see an upsurge in buying of residential units as property prices in the second quarter of this year have gone down in comparison to the first quarter. The National Housing Bank (NHB) recently published its quarterly index data for the period April to June 2013. An estimate made by the consultancy firm Jones Lang LaSalle, India on its findings has predicted that this trend will continue and potential buyers will break their wait-and-watch stand as price correction will start.
While residential inventory seems to have piled up over the last few years, prices continue to remain high in major metro cities. This is also corroborated by the NHB Residex city indices, which suggests that the fall in prices in the most recent quarter has been largely a phenomenon limited to smaller cities such as Kolkata, Chennai and Hyderabad, rather than big metros like Mumbai.
“Yet another belief being entertained on various fronts is that a certain section of developers, given the current levels of inventory and industry slackness, will be forced to reduce prices considerably. While inventory pile-up is certainly a reality, the real question is whether this is a sufficient cause for developers to offer considerable discounts to individual buyers,” said Om Ahuja, CEO, residential services, JLL India.
Overall unsold inventory in cities like Mumbai is high (as per JLL data, Greater Mumbai has close to 48 months unsold inventory as against an acceptable level of 15 months). However, a major part of this unsold inventory lies in the island city,
which has never been affordable to small individual buyers. On the other hand, in the comparatively more affordable suburban locations, vacancy is relatively lower and prices have not
corrected as expected. “Purchasers have, in fact, remained stable or risen. Therefore, if anyone
benefits from this current scenario, it is either bulk-buying institutions or High Net-worth Individuals (HNIs) or NRIs,” Mr Ahuja predicted.