The year buyers took centrestage
In 2015, property prices stabilised as builders focused on getting the size and the cost of the units right to clear inventory
Adrastic fall in the number of new launches and a consistent effort on the part of developers to consolidate and complete pending projects were the highlights of 2015. The affordable housing segment gained immense favour
both from the government and the homebuyers. The builders too reoriented their focus from mid to small ticket sizes to cater to homebuyers demand and enhance their cash flows.
Unlike previous years, homebuyers were not satisfied with the offers in property brochures or the freebies handed to them during the festive season. “The key words in customer satisfaction for home purchases in 2015 became project delivery, pace of construction progress, and product quality,” says Anshuman Magazine, chairman and MD CBRE South Asia Pvt Ltd.
“Apart from becoming more realistic with property pricing, developers and landlords became more accommodative
of homebuyers’ require-requir ments.ments. Currently, develop-develo ersers are more flexible withwi property price points anda are ready to offer better pay-pa mentment plans and structures to get the buyer to return to thet market. The focus is now on clearing ready inventoryinvento rather than launching nenew projects,” Magazine says.
The apex bank pared keyk interest rates four times ththis year. The lowering of interestintere ratesrates bybytheReservetheReserve BankofBankof IndiaInd (RBI) and attractive deal terms such as subvention schemes etc offered by developers also made some fence sitters come forward to invest in houses.
But despite reduced home loan rates, relaxation in loan-to-value (LTV) ratio in the housing sector, and significant discounts and attractive offers from developers on completed projects—investors are yet to return to the market in comparison to demand in previous years. Major reasons for this sluggish demand are homebuyers’ expectations on project delivery, the pace of construction progress, and ultimately, product quality, says Magazine.
“While 2015 did not bring the hoped for growth in residential real estate, the silver lining is that the bad days seem to have bottomed out and sales have picked up in a few cities. Developers’ initiatives like offering attractive schemes and deal terms, coupled with lowering of interest rates by the RBI, have activated fence sitters,” says Anuj Puri, chairman and country head at JLL India.
“The year did not see any significant activity or short-term revival but decision making on the part of buyers was faster. Enduser demand existed for value-formoney projects that were nearing completion in select pockets of Ghaziabad, Faridabad and certain pockets along the NH8. The consumer was seen buying two types of housing products – those that were close to delivery (where work on interiors had started), enjoyed a good location and those that were 50% to 60% ready,” says Anckur Srivasttava of GenReal Advisers.
There was no appreciation in housing prices given the amount of supply that exists in the market (unsold inventory stands at 1,80,000 units) but going forward, end-user activity is expected to improve sentiments. Buying activity will continue in established locations but inventory in emerging locations may take a few more years to get traction, Srivasttava says, adding builders are focusing on working towards creating brand ambassadors out of customers.