8/17/2019 Residential property prices hit the roof even as demand cools

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Residential property prices hit the roof even as demand cools

Despite a slowdown in the realty market, residential property prices have

raised 33 percent in Grater Noida, 30 percent each in Noida, Gurgaon, and

Mumbai and 35 percent at Chennai over a period o one year ended !une"0#"$

%ndicating a slowdown in the demand space, the housing loan growth has

declined rom #& percent to #5$" percent in !une "0#", according to the

'eserve (ank o %ndia$ )owever, Developers argue since the cost o credit,

input and labour has gone up signi*cantly, they have no option but to pass it

on to Consumer$ +nalysts, point out it is more o a supply constrained leading

to rise in property prices$

%n the primary market, the demand is still high, but the Developers are

going very slowly on the launches$ Developers have cut supply to sustain

current property prices$- %n the second .uarter o the calendar year, the

National Capital 'egion /N$C$'$ saw a decline o appro1imately "2 percent in

new launches in the residential segment against the previous .uarter$

Mumbai saw the ma1imum drop o &3 per cent in the supply in the second.uarter o calendar year, compared to #4 only #,"00 units were launched in

Mumbai during ", down rom 2,20 in the *rst .uarter$ 6nly nine pro7ects

were launched in the city during " o the calendar year$ 8he demand

remains strong in the mid9segment o 's$ "5 lakhs to 's$ &5 :akhs category,

but in the high9end segment there is a drop in demand$ 8here is a latent

demand in the mid9segment category, where prices have gone up 59#0

percent in the last two .uarters this year, and are e1pected to go up another

59#0 percent in the ne1t two .uarters$ 8he land cost has already gone up to

509#00 per cent in NC', e1cluding Delhi$

 8he cement prices have gone up rom 's$#;5 per bag last year to 's$ "

8/17/2019 Residential property prices hit the roof even as demand cools

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steel cost are the other reasons that Developers are citing to raise the

property prices$ +lthough the primary market sales volumes remain steady

or the mid income segment, the secondary market values are down by 309

20 percent$ 8here is a demand constraint in the secondary market and

supply constraint in the primary market$

+t the same time, the =nd >ser?s market like (angalore and )yderabad have

been nearly a our percent increase in the prices over the past one year,

while @olkata has seen a construction o nine percent$ )yderabad is a slow

market, while in (angalore the demand remains robust and sales volumes as

reported by us are 50 percent up- points out Aingh o %ndia )omes, a super

brokerage *rm$

+ccording to (angalore9based Aobha Developers, it reported a &3 percent

rise in the net pro*t in the *rst .uarter ending in !une "0#", the salary levels

have risen #" to #3 percent, but their average realisation has increased only

about seven percent, rom 's$2,; per A.$t last year to 's$5,35 per s.$t

this year$ 8he steel prices have increased rom 's$ 3,000 93&,000per ton

last year to 's$50,000 per ton today$ 8hey are much behind inBation$ %n

(angalore, the land price is much cheaper than in N$C$'$ or in Mumbai$ 8heCentral pockets o )yderabad have seen price escalation o upto #0 percent,

but the prices in other areas have remained .uite stable$