Res­i­den­tial sec­tor poised for growth this year

All in­di­ca­tors point to­wards a con­vinc­ing re­vival for the hous­ing sec­tor by the end of 2016

HT Estates - - HTESTATES - Ash­winder Raj Singh

Iad­verse global eco­nomic cir­cum­stances, put a lot of pres­sure on earn­ings, ex­ports and over­all de­vel­op­ment. The gov­ern­ment was able to con­tain the fis­cal deficit to the bud­getary tar­get of 3.9%, and is work­ing on low­er­ing it fur­ther to 3.5% in the fi­nan­cial year 2016-17.

The RBI has cut key in­ter­est rates by 1.5% since Jan­uary 2015, and the repo rate has come down to 6.5%. This has started show­ing a vis­i­ble pos­i­tive im­pact on the econ­omy. I ndus­trial growth crawled back into the pos­i­tive zone at 2.1% in March 2016, crude oil prices sta­bilised at a favour- able price band for In­dia, CPI in­fla­tion de­creased fur­ther at 4.83%, and there are morethan- op­ti­mistic ex­pec­ta­tions for a good mon­soon this year. Fac­tor­ing all this in, the In­dian econ­omy looks well poised to grow at a healthy rate of 7.7 to 7.8%. Lower than ex­pec­ta­tions, in­her­ent weak­nesses in the sys­tem and in­ad­e­quate in­fra­struc­ture de­vel op­ment con­tinue t o i mpede f aster growth.

The year 2015- 16 saw trac­tion in ur­ban de­mand, and the cur­rent fi­nan­cial year is ex­pected to usher in growth in the ru­ral econ­omy on the back of favourable mon­soons. Agri­cul­ture con­trib­utes 15% to the coun­try’s GDP; and with 2016 be­ing de­clared a ‘La Niña’ year, fur­ther growth is more or less as­sured. The im­pact of La Nina phe­nom­e­non on our econ­omy is note­wor­thy. The av­er­age growth in GDP/ private con­sump­tion/ in­vest­ment on a year-on-year ba­sis is 8.9%/7.4%/10.4% dur­ing a La Niña year, com­pared to av­er­age growth of 5.8%/5.2%/7.2% on a year-on-year ba­sis in a non-La Niña year.

The signs of eco­nomic re­vival, along with for­eign in­vest­ment com­ing in the coun­try, are ev­i­dent in the share mar­ket of­fer­ing 14% re­turns over a 15-year pe­riod end­ing in March 2016. FDI in­creased in the coun­try by a whop­ping 37% dur­ing the fi­nan­cial year 2015-16, go­ing up to $39.2 bil­lion from $28.78 bil­lion in the pre­vi­ous fi­nan­cial year.

Judg­ing by how the econ­omy is mov­ing, there is def­i­nitely a ra­tio­nale for pos­i­tiv­ity in terms of business per­for­mance. Let us take a closer look at how the res­i­den­tial real es­tate sec­tor has been per­form­ing, and what lies ahead: rise in sales in first quar­ter cy­cle in 2016. This quar­ter saw a sale of 42,521 units com­pared to 39,001 units sold in the fourth quar­ter cy­cle in 2015 - an in­crease of 9%.

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