Better than others
In and around the tricity — Chandigarh, Mohali and Panchkula — some locations and segments continue to fare better than the general trend in real estate market
CHANDIGARH: A subdued market sentiment and low buyer demand continues to keep the Chandigarh tricity housing market struggling with the slowdown.
The slowdown started around six years ago and the market is yet to recover from the sharp price corrections and deceleration in the supply growth.
The realty assets lost value by 20% to 50% during this period depending on the location, segment and price-bracket. Supply expansion took a hit with builders unable to attract the buyer. Though, supply growth declined, but with low demand levels, the unsold inventory with builders increased.
MARKET REVIVAL DISTANT
Among different price segments, mid-price and luxury segments suffered the most in terms of low demand and price corrections. Price corrections were sharpest in the apartment segment in comparison to the plotted developments. Panchkula, Mohali and the periphery registered the sharpest price corrections. Currently, the demand levels remain low and even though, rate of price corrections have substantially decline in the last eight months, however, the market revival is still some time away.
In the midst of overall sluggish market conditions, there are some exceptions to the general trend. In some of these areas price movements turned positive, while in other sales volumes steadily increased with stable prices.
Chandigarh and some locations in the periphery are faring relatively better than most locations in the tricity. “The housing mar- ket in Chandigarh is registering an upswing in demand and this is positively impacting the price growth also. Within the city, northern sectors including sector 7, 8, 9 and 10 are better positioned in terms of price and demand growth than other sectors,” says Sanjay Arora, 42, a Chandigarh-based real estate consultant.
The supply-demand equation is the main reasons for the positive price growth in these locations. “The supply is very limited in the city. There is no large scale addition to supply. So, even a small increase in demand start to fuel positive price movements. This is the case with current city housing market. The demand revived in the last eight months,” says Arora.
In the periphery, upcoming areas in the vicinity of the international airport are attracting buyer attention. “Aero City and IT City in Mohali, located near the airport and connected with the rest of the tricity areas through Airport Road, witnessed price appreciation when there were price corrections in most of the tricity. Favourable demand drove the price appreciation. After demonetisation housing prices in these locations are stable,” says Sanjiv Sharma, 54, a Chandigarhbased real estate consultant.
The affordable and budget segments are registering larger sale volumes than the mid-price and luxury segments in the tricity. The National Housing Bank’s Residex also indicates that the smaller-sized and cheaper housing units recorded consistent price appreciation in the last one year.
According to the Residex HPI@Market Price for under- construction properties, the segment, 646 sq ft sized properties, registered sharp price appreciation by 31% between June 2015 and March 2016. Thereafter, for two quarters between March and September, prices fell by 17%. But, since September last year, prices consistently increased. Between September and December 2016, prices in the category increased by 30%.
IMPACT OF DEMONETISATION
The demonetisation announcement put a break to the sharp price growth in the segment, but still prices increased by 3% between December last year and March this year. Since June 2015, the average price in the segment has increased from ₹4,286 per sq ft to ₹7,353 per sq ft by March this year.
“One of the reasons for the slowdown hitting the region’s realty market was builders miscalculating the demand concentration. Most builders created supply in the mid-price and luxury segments. These segments lacked adequate end-user demand and were mainly driven by the speculative investor. When the investor withdrew from the market, the demand and price in these segments were sharply hit. Now, some of the builders are correcting this strategy and focusing on the end-user demand in the affordable and budget housing segments. The increase in supply is being matched by the demand. The sales volumes are positive but there is price stability in these segments. The end-user demand doesn’t fuel price growth on same lines as does the speculative investor demand,” says Sharma. SEGMENTS Among different segments, the independent floor with smaller ticket size, located in the periphery, registered a positive trend in demand and supply. The trend is continuing at present.
“Areas like Kharar benefited with builders creating supply of smaller sized G+2 and G+3 (ground plus two/three) floors for people looking for cheaper homes in the proximity of Chandigarh. Builders bought smaller sized plots – 150 sq yard to 250 sq yard and constructed floors on these, selling single or couple of units at a time,” says Manjeet Singh, 39, a local real estate advisor.
Most of these floors available in the periphery are priced between ₹20 lakh to ₹40 lakh. The sizes vary from 800 sq ft to 1,800 sq ft. “2-BHK (bedroom, hall, and kitchen) and 3-BHK floors are in most demand. The price range is perfect even for a mid-salaried family who after availing the loan can easily afford these floors. The options have also consistently increased in the segment in the last couple of years. It is a segment dominated by the end-user and the investor is still to enter this segment,” says Singh.