Year ends on pos­i­tive note for hous­ing sec­tor

WHAT MAT­TERS Most changes are favourable for end-user with greater trans­parency, builder ac­count­abil­ity, cheaper prices and loan rates, lesser com­pe­ti­tion from spec­u­la­tive in­vestor

Hindustan Times (Chandigarh) - Estates - - ESTATES - Mu­niesh­wer A Sa­gar

For the home buyer in the Chandi­garh tricity, homes be­came cheaper and 2016 was a tur­bu­lent year for the hous­ing sec­tor. Chandi­garh tricity com­prises Chandi­garh, Panchkula, SAS Na­gar and the pe­riph­eral towns of Zirakpur, Dera Bassi, New Chandi­garh or Mul­lan­pur, and Kharar.

The realty slow­down con­tin­ued in 2016 as the de­mand-sup­ply mis­match led to un­sold in­ven­tory pil­ing up. The year wit­nessed more and more home buy­ers ap­proach­ing con­sumer courts for get­ting com­pen­sa­tion against erring builders. There were sev­eral cases of builders, par­tic­u­larly in the pe­riph­ery, fail­ing to de­liver pos­ses­sion in time be­sides fail­ing to en­sure in­ter­nal and ex­ter­nal in­fra­struc­ture.

On the pos­i­tive side, de­vel­op­ers in the pe­riph­ery started re­design­ing their hous­ing prod­ucts in tune with the pre­vail­ing de­mand trends in the mar­ket, con­cen­trated in the bud­get and af­ford­able hous­ing seg­ments.

The cen­tral gov­ern­ment no­ti­fied the Chandi­garh Real Es­tate (Reg­u­la­tion and De­vel­op­ment) (Gen­eral) Rules, 2016, un­der the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act, 2016. SAS Na­gar and Panchkula are yet to get the rules un­der the Act as both Pun­jab and Haryana are yet to no­tify the rules. The Real Es­tate Reg­u­la­tory Author­ity in all three ar­eas are ex­pected to be op­er­a­tional af­ter April 2017.

Im­pact of note ban

De­mon­eti­sa­tion of higher value notes im­pacted home prices, sales and de­mand as un­cer­tainty pre­vailed in the tricity hous­ing mar­ket.

San­jay Arora, 42, a Chandi­garh-based real es­tate con­sul­tant, says, “De­mon­eti­sa­tion cre­ated a ma­jor dis­tur­bance in the lo­cal hous­ing sec­tor. The ini­tial re­ac­tion was panic. Later, the hous­ing mar­ket stake­hold­ers adopted a wait and watch ap­proach.”

Mar­ket sen­ti­ment, which was sub­dued for four years, fur­ther nose­dived and home prices fell sharper. “The real es­tate mar­ket sit­u­a­tion and trends will be­come clear in the com­ing months, par­tic­u­larly in the new fi­nan­cial year,” says Arora.

More sup­ply, less de­mand

Large un­sold in­ven­tory in the tricity, low de­mand and liq­uid­ity crunch for builders dis­cour­aged the launch of new projects. “In the pub­lic sec­tor, gov­ern­ment bod­ies such as the Chandi­garh Hous­ing Board (CHB) and Greater Mohali Area De­vel­op­ment Author­ity (GMADA) added to sup­ply cre­ation. In the pri­vate sec­tor, most of the sup­ply cre­ation that took place was in the pe­riph­ery in the bud­get and af­ford­able seg­ments. Smaller built-up res­i­den­tial spa­ces came up in Kharar and Zirakpur. Most de­vel­op­ers strug­gling to meet pos­ses­sion dead­lines fo­cused on the de­liv­ery in the al­ready run­ning projects,” says Balwinder Sandhu, 54, an SAS Na­gar-based real es­tate con­sul­tant.

Like the past four years, the de­mand lev­els re­mained low both in the pri­mary and se­condary mar­kets. Only the need-based end-user was ac­tive in the mar­ket, which failed to ab­sorb the large base of un­sold in­ven­tory or drive realty growth in the re­gion.

“With poor buyer con­fi­dence in builders, only pos­ses­sion­ready prop­er­ties at­tracted the buyer’s at­ten­tion. The ac­tive end-user was in the bud­getac­com­mo­da­tion seg­ment( Rs 15 lakh to Rs 35 lakh). Rel­a­tively small-sized prop­er­ties were in de­mand, par­tic­u­larly in the pe­riph­ery where builtup prop­er­ties are avail­able in this seg­ment. But on the whole in­vestors were ab­sent from the mar­ket. The few ac­tive were ex­plor­ing dis­tress sale prop­er­ties,” says Vikas Bhalla, 53, a Zirakpur-based real es­tate con­sul­tant.

The apart­ment seg­ment, par­tic­u­larly in the mid-price and lux­ury seg­ments, con­tin­ued to lose ap­peal among buy­ers.

“Though prices in the apart­ment seg­ment have fallen sharply yet there are is­sues that have come up re­cently to dis­cour­age buy­ers. For in­stance, in our search for a good apart­ment in the price range of Rs 40 lakh to Rs 45 lakh, there were few good op­tions. We dis­cov­ered main­te­nance prob­lems were wide­spread, and the qual­ity of con­struc­tion was poor in most projects,” says Atul Ku­mar, 50, a Zirakpur-based prospec­tive buyer, em­ployed with a pri­vate sec­tor in­sur­ance com­pany.

An ex­cep­tion to the trend of low de­mand was Greater Mohali Area De­vel­op­ment Author­ity’s IT City project. Floated this year, the scheme re­ceived good buyer re­sponse. Res­i­den­tial prop­er­ties around air­port road, par­tic­u­larly IT City and Aero City, re­ceived rel­a­tively bet­ter buyer re­sponse.

Prices on slide

For the fifth year, prices in the tricity and the pe­riph­ery were on the de­cline.

In cer­tain lo­ca­tions such as Chandi­garh, there was a trend of sta­bil­ity with prices de­clin­ing marginally by 5% to 10%.

In some places such as IT City and Aero City in SAS Na­gar, price ap­pre­ci­a­tion was re­ported. In most other lo­ca­tions, the gen­eral trend was of price cor­rec­tion.

“Both SAS Na­gar and Panchkula recorded price cor­rec­tions of 20%. In the pe­riph­ery towns of Zirakpur, Kharar and Mul­lan­pur, there were price cor­rec­tions rang­ing from 10% to 25%, de­pend­ing on the lo­ca­tion,” says Bhalla.

Mar­ket dynamics changed with the an­nounce­ment of de­mon­eti­sa­tion on Novem­ber 8. With the cash com­po­nent of realty deals miss­ing, the prices, par­tic­u­larly in the se­condary mar­ket, came un­der pres­sure.

Look­ing ahead

The hous­ing sec­tor is all set for ma­jor changes in the New Year in terms of sup­ply, de­mand and prices. Also, the set­ting up of the real es­tate reg­u­la­tory body in the states and Union ter­ri­to­ries will bring in much-needed trans­parency.

The de­pen­dence of the hous­ing sec­tor on black money is also ex­pected to end with de­mon­eti­sa­tion. “De­mon­eti­sa­tion and the con­se­quent cash rich banks are ex­pected to lead to cheaper home loans. Banks have al­ready started cut­ting in­ter­est rates. This is bound to push up de­mand in the sec­tor,” says Arora.

New sup­ply cre­ation in the short and medium terms will be re­stricted with builders stip­u­lated un­der the RERA Act to keep 70% of de­posits from buy­ers in a sep­a­rate ac­count kept solely for the project.

Most of the changes that took place this year are favourable for the end-user – greater trans­parency, builder ac­count­abil­ity, cheaper prices, home loan rates, and lesser com­pe­ti­tion from the spec­u­la­tive in­vestor.

The price ap­pre­ci­a­tions and de­mand in IT City and Aero City in­di­cate that in­fra­struc­ture de­vel­op­ment and safety net for buy­ers hold the key to boost­ing de­mand and prices.


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