The prices of residential properties in Mumbai declined in 2017 for the first time in a decade because of demonetisation, new rules to protect consumers and the Goods and Services Tax, worldwide property consultant Knight Frank said in a report published on Wednesday.
"Unlike the conventional narrative, developers cut down prices to offload their unsold inventory", Samantak Das, chief economist and national director at Knight Frank, wrote in the report published on Wednesday.
The study said that the effective prices in the organised residential projects in the city have dropped to the extent of 12 per cent, which included a slash in the base prices charged by the developers along with waiver of other charges like stamp duties. "Until the end of 2017, India's residential sector had shrunk to a fraction of its size in less than a decade".
With trickling sales and sharp drop in launches, he said the unsold inventories in NCR have come down, still it would take more than four years to clear the unsold stocks. The second half of 2018 can see the beginning of a recovery as disruptions from the goods and services tax settle, infrastructure building gains pace and economic activity improves, he added. New launches fell by 13% and failed to touch the fivedigit mark, sales fell by 4%, hovering just above 15,000 units, and the average asking price for apartments fell by about 3%.
Bengaluru recorded negative growth in both launches and sales for the first time in H2 2017.
Home launches hit an all-time low during July-December 2017 with a meagre 940 units entering the market an 84 per cent drop over the corresponding period in 2016. Even sales in 2017 were 56 percent lower than they were in 2011, when the city's real estate market was its peak. The Chennai residential market, as of now, holds inventory to sell over the next 18 months.
"On the residential market front, launches, between July and December, hit a new low, largely due to RERA (Real Estate Regulation and Development Act) and its impending implementation".
Homebuyers have a narrow window of opportunity though, because the West Bengal Housing Industry Regulation Bill (HIRA) 2017, already passed by the State Assembly a year ago, is expected to be notified soon.
As per the report new office space supply hit double digits for the first time since 2012, 76% higher YOY.
Unsold inventory levels had peaked in 2014 at 0.72 million units.
"For the first time in this decade, the Mumbai market has experienced a drop in residential prices".
The report said that the share of affordable homes among new projects rocket from 53 per cent in 2016 to 83 per cent in 2017 indicating developers' focus towards properties within Rs 5 lakh price bracket.
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