Biggest drop in housing prices in a decade

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Bengaluru recorded negative growth in both launches and sales for the first time in H2 2017.

The number of new housing projects launched in the top eight cities of India fell by 41 percent to 103,570 units in 2017, as against 175,822 units in 2016, according to a report by property consultant Knight Frank. Customers who drove a hard bargain got reductions of up to 10% in apartment prices, in the form of cash discounts or freebies, says Knight Frank's latest report on the sector.

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, "2017 was been packed with uncertainty, volatility and long-term promise of new opportunities". As against new launches of 4.8 lakh units in 2010 across eight major markets - Mumbai, NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad - only 1.03 lakh units were launched a year ago. In the first half of 2016, the market had registered a 4% year-on-year drop in quoted prices over 2015.

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.

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The report said NCR and Mumbai had seen sales numbers increase by 21 per cent and 19 per cent on a year-on-year basis, respectively, during the second half of calendar year 2017. While 3.68 lakh apartments and houses were sold in 2011, only 2.28 lakh units were sold previous year.

Homebuyers have a narrow window of opportunity though, because the West Bengal Housing Industry Regulation Bill (HIRA) 2017, already passed by the State Assembly previous year, is expected to be notified soon.

The report also suggested that the new launches of residential units had collectively come down by 78 percent at Mumbai, Delhi NCR, Chennai, Pune, Bengaluru, Kolkatta, Hyderabad and Ahmedabad. But from the sales peak of 2011 when 3,68,568 units were sold, this is a step decline of 62 per cent in 2017 at 2,28,072 units. The developers also have unsold inventory down by 43 per cent which is due to the restricted launches that have eased inventory pressure, but highlighted the market stress.

In case of office space, new completions increased 7 per cent in 2017 to 32.7 million sqft compared to 30.7 million sqft in 2016, but not at par with demand. Home affordability remains the highest in Mumbai at 7.8 times a family's annual income, compared to 11 times annual income in 2010. Sales, however, are up 5% annually, and with demand going up, a price hike may not be far behind.