Home sales fell to a five-year low in the first six months of this year as the note ban continued to hurt demand and developers turned cautious amid tougher regulatory requirements, a survey by property consultant Knight Frank India found.
While sales volume dipped 11 percent, new launches fell 41 percent to a seven-year low over six months across eight metropolitan cities in the country. Ahmedabad and the National Capital Region were the worst hit, with new projects falling by more than 70 percent.
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The drop was largely due to the impact of demonetisation and then the Real Estate Regulation Act, said Samantak Das, the chief economist and national director of research at Knight Frank. Another reason for the sharp fall in new launches is the inventory build-up with projects completed four years ago also lying vacant in the NCR, said the report.
Sales picked up in May and June as buyers feel more assured now that RERA has come into force, said Das.
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The one sector that's seen a sharp revival in new project launches in affordable housing. Finance Minister Arun Jaitley had relaxed the criteria for apartments to fall under the category in his budget speech on February 1.
Flats costing less than Rs 25 lakh are back in focus as the share of such apartments has more than doubled to 36 percent in June compared to a year ago, according to Knight Frank.
Mumbai will be one of the first regions to recover from the slump, said Das. Maharashtra got its real estate regulator before others and that will lead to a quicker transition, he said.
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