Quarter on Quarter, Construction of Newly Launched Real Estate in India Falls

The number of new launches of Real estate in India stood at 25,800 units in the first quarter of 2017. At first glance this number may seem healthy, yet it represents a drop of sixteen percent from the number of houses launched during same period last year. Across the top eight real estate markets in India, the number of new launches has declined steadily each quarter since the RERA was announced in March of 1016.

Real Estate in the Short Term

According to some of the best real estate sites and property consultancies, the price of real estate in the short to medium term is not expected to increase. Since March of last year, corresponding to the announcement of the incoming RERA regime, the number of new launches has fallen every quarter since. The demonetization exercise in November of last year also stalled the number of new launches over the past two quarters. However, in the current post RERA regime, the sentiment of buyers is expected to brighten eventually

While the number of new launches in the top 8 real estate markets has fallen by nearly sixteen percent since last year, the total number of new launches across India has fallen by eight percent since April of last year to March end this year as compared to the same period from 2015 to 2016.

Affordable Housing Bests Luxury Housing

It is notable that affordable housing’s share in the total number of new launches increased to 30 percent during April of 2016 to March 2017 from 25 percent during the same period from 2015 to 2016. Interestingly the share of high end and luxury houses dropped from thirteen percent of new launches in 2015 to 2016 to eleven percent of new launches from 2016 to March end 2017. According to some top real estate analysts, the sales of luxury homes has been hit particularly hard over the past few years due to a mismatch between the supply of and demand for such homes.

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Experts Corner

According to some top real estate experts, to comply with RERA norms, builders will make some intrinsic changes to their operations, business structure, and marketing strategies. Hence new launches are expected to remain restricted over the next three to four quarters. It is expected that consumers will be less enthusiastic about buying a new property in India during first half of this year. Furthermore, as IT companies continue to downsize, it will dampen the sentiment among numerous end users as well.

Conclusion

Towards the end of 2017, real estate sales are expected to pick up due to an improvement in buyer’s sentiment brought about by the introduction of RERA. According to real estate experts, market sentiment will continue to remain weak for the time being as markets adjust not only to the norms of RERA but also to the soon to be introduced GST regime.

In the long run however, the real estate market is likely to remain upbeat and strong as interest by homebuyers and investors to invest in real estate improves with more positive market sentiment.