Online house-hunting on the rise, but sales remain low
Irrespective of market dynamics, homebuyers who want to buy a house will continue to look for it. Giving fillip to this search for houses is the buzz that property prices have bottomed out, and that many aspiring homebuyers are looking for good deals.
In a report on trends of online house hunting , the online realty portal Magicbricks.com finds that there has been a 61% rise in those looking for a house, over the past year. It says that the number of active property seekers has gone up sharply on a year-on-year basis from about 340,000 in July 2016 to about 550,000 in September 2017.
However, increased online house hunting is not translating into actual sales.
SALES CHECK
In the past few years, property prices have been stagnant or have corrected in some locations. This lull is not limited to one or two markets, it can be seen across the country. It would appear that most homebuyers are waiting for prices to reduce and for real estate regulations to be in place.
At the same time, those in the realty sector are saying that while prices have bottomed out, they suspect people are still postponing their decision, expecting a further decrease .
There is another category of homebuyers, one that has managed to arrange the financing and is actively looking for a house. Supply-side stakeholders are optimistic about this group.
“Usually, we see a surge in property searches during the festive season. But at present, the demand is more from end- users, who are usually slow in making decisions. We expect the increase in searches to result in an uptake in future transactions,” said Ankur Dhawan, chief investment officer, PropTiger.com, a real estate portal.
The mismatch in demand and supply is also a reason behind the low sales volume in the current market.
“Yes. Demand is more in affordable housing but there is a lack of supply in this segment,” said Dhawan. For instance, most enquiries from homebuyers in Bengaluru and Mumbai are for homes in the range of Rs 40-50 lakh, but there is lower supply in this segment.
However, for areas like Greater Noida West, there is supply in this range but also a lot of negative sentiment, as insolvency and other legal proceedings have been launched against many developers in this area. Because of this, many homebuyers are reluctant to buy here, added Dhawan.
Thus, very few houses are being bought and sold, which is evident in developers’ inventories, which are either stagnant across the country or have reduced only marginally over the year, despite negligible new launches.
Many experts believe that weak sentiment among homebuyers is the reason for low property transactions.
“The economy is going through a rough patch with lots of policy changes, real estate in particular, in the recent past, be it implementation of Real Estate (Regulation and Development) Act, 2016 (RERA) or Goods and Services Tax.
All these had an impact on homebuyers’ decisions,” said Samantak Das, chief economist and national director-research, Knight Frank India.
Besides that, “The information technology sector, which is a major driver of home sales, is going through a bad phase and hence sales are low,” added Das.
Apart from that, most homebuyers are looking for RERA-registered properties but, except Maharashtra, in most states, the RERA websites are not operational and do not show any information that buyers can use in decision-making. This too could bea reason why home buyers are not taking their decisions now.
However, many don’t belive that property prices are an issue in this market.
“There is enough time correction and even now many developers are offering discounts,” said Das.
If you are looking to buy a property to live in and have also arranged for finances, you can find a good bargain. Go for RERA-registered properties, or those that are complete or are near completion.
IN PAST FEW YEARS, PROPERTY PRICES HAVE BEEN STAGNANT OR HAVE CORRECTED IN SOME LOCATIONS. THIS LULL IS NOT LIMITED TO ONE OR TWO MARKETS, IT CAN BE SEEN ACROSS THE COUNTRY