Buyers can expect cooling off in the real estate prices not just in metros but also in tier I and II cities, according to a report by brokerage firm Ambit Capital.
The report said that though the RBI’s Housing Price Index suggests that prices have moderated on a pan-India basis, data from property websites suggests a deeper slowdown in India’s large cities, with prices falling by 7-18 per cent year-on-year.
This cooling down comes in the wake of banks tightening their purse strings to developers and government remains committed to its effort to reduce black money, it added.
The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, housing finance books, but also a generalised slowdown in GDP growth.
“Our visits to five property registration offices in Mumbai suggest a sharp drop in the registration of new residential properties and data from property valuers in Maharashtra and Tamil Nadu suggest that transaction volumes have fallen by 10-15 per cent per annum for three consecutive years now. Also, new launch volumes are down 40-80 per cent on a pan-India level,” the report said.
The report also pointed that some prime parts of cities such as Delhi have already steep price correction at 20-25 per cent and smaller cities such as Jaipur, Rajkot and Lucknow have seen a 15-20 per cent correction on a yearly basis.
Data from property research houses suggest that regions such as Mumbai and Delhi would take as much as 11-14 quarters to clear the existing inventory.
“Discounts have increased significantly in the secondary transactions market and distressed real estate liquidation by lenders (who have not been repaid by developers) is becoming increasingly common,” the report said.