With more and more housing inventory pilling up, the developers have put a stay on the further development of new projects in the real estate segment. It can be accessed from the fact that the home launches in December quarter were about 22,428 units which have been fallen down by 5,531 units in March quarter this year. The fall is estimated to be 19.46% with 22,897 units at the March quarter.
The major reason for this decline is accounted for developer’s focus on clearing up their existing inventories. Not just the home launches, even the pricing has also seen a steep fall with prevailing rates at Rs. 6,185 per sq. ft from January to March. The price of homes have been fallen by 1.67% which was Rs. 6,290 per sq feet in the last quarter of December.
However the home sales were muted in the last quarter of December with total 28,472 units sold off during this quarter and then observed a marginal fall of 1.2% from January to March 2017 by 341 units. This can be assessed as a post-demonetization effect as the transaction activity has been slowed down in anticipation of volatility in market. Buyer, sellers, banks as well as private equity investors are adopting a wait-and-watch strategy to get the pulse of market post-demonetization.
Regions like Mumbai, Chennai and NCR including Gurgaon as well as Noida have been flooded with significant inventory overhang. The number of homes unsold were 4,87,043 in the last quarter of December and further observed a marginal fall in the first quarter this year with 3.12% at 4,71,855 units. The further implementation of RERA (Real Estate Regulatory Act) will constrain the developers to catch-up with the deadlines of previously launched projects else they shall be liable to pay penalties for delays in their projects thus putting them at losses.
But as of now, developers are constantly focusing on clearing off their existing back-logs of home-inventories and refraining themselves launching new projects.