Housing prices fall across the board in top 8 cities

All segments in Delhi-NCR witnessed a drop in ticket size in 2016 owing to slow sales velocity and subdued market sentiments, says a Cushman & Wakefield report

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In the latest report from Cushman & Wakefield, it is observed that the ticket size of new launches across top eight cities saw an average decline of 14% year – on – year (y-o-y). This was a consequence of many developers recalibrating their market strategies that involved reducing effective cost of their property and restricted new launches in order to reduce their inventory holding. In majority of the cities, developers have sought to rationalize ticket sizes especially in the high-end and luxury segments, which has been hit the most.

In accordance with the market sentiments, the total number of new housing units declined during the year by 11% to approximately 1,13,000 units. Of this, mid housing segment accounted for 56% of the total unit launches followed by value housing segment at 32%. On a y-o-y basis, value housing segment noted an increase of 22% to more than 36,300 units. The high-end segment, on the other hand, was impacted the most, wherein launches almost halved to 12,000 units during the year.

Value housing are units typically priced in the range of INR 2-5 million; values for mid segment are for units in the range of INR 5-10 million except Delhi-NCR and Mumbai, where the range in mid segment housing is typically between INR 5-17 million (20 million for Mumbai). High-end segment values are for units typically priced above INR 10 million except for Delhi and Mumbai (where it is more than 17 million in Delhi and 20 million for Mumbai)

Anshul Jain, Managing Director, India, Cushman & Wakefield, “The government has been resilient in its efforts to create affordable housing and achieve its target of ‘housing for all by 2022,’ and is taking steps to build in benefits for developers to participate. Post the demonetization, markets have witnessed a slow uptake of residential properties on account of price and value mismatch. Consequently, developers are also relooking at their strategies to create better value for home buyers. The clarity on affordable housing’s definition provided by the government in this year’s Union Budget along with the benefits accruing from the infrastructure status to affordable housing projects should bring in a spurt in new launches in the later part of the year, albeit these are most likely to be in suburban and peripheral locations.”

“In terms of projects that have already been launched and where units remain unsold, developers are offering discounts and schemes to decrease their inventory and these schemes will continue for a while till the markets finds a balance. Further, the ticket values of new units being launched may see some change this year, as many developers are working on lowering these to increase the affordability of their units by either offering attractive prices or smaller units. This, along with reduced bank loan rates are expected to create some velocity in the sales by the end of the year and going into the next year.”

Delhi NCR

All segments in Delhi-NCR witnessed a drop in ticket size in 2016 owing to slow sales velocity and subdued market sentiments. The steepest drop was seen in the high-end segment wherein ticket size of newly launched units in 2016 declined by 62% to INR 2.5 crores. The drop in ticket size came on the back of lower average launch prices, as well as smaller sizes of units launched. During the year, developers launched projects at relatively less-expensive locations in Noida and Greater Noida, as compared to 2015 when launches were seen in more premium locations of Golf Course Road & Golf Course Extension Road. This resulted in the average launch price declining 40% at INR 9,000/sf during 2016. Overall, the average size of newly launched units too declined by 37% INR 2,800 sf, which brought down the average ticket size.

The value housing segment’s ticket size dropped 17% to INR 36 lakhs in 2016. The fall in average ticket size comes primarily due to lower average unit size of 1,200 sf.

Overall, launches in Delhi-NCR declined 52% to 11,400 units during 2016 as the region continues to reel under subdued sales velocity and piling up of unsold inventory. Have emerged as an investor-driven market in the last few years, Delhi-NCR has been one of the most impacted regions in the ongoing slowdown of residential market.

 

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