Residential real estate markets in the top 30 cities in India have steadily moved on from the combined effect of demonetization, RERA and GST. The short-term losses arising from several regulatory changes have been absorbed by realty markets in these cities. For the quarter that concluded in September, 2017, there were hints of the realty sector steadily going back to normal. The sales volumes registered were the very best across the last 5 quarters. 22 out of the top 30 Indian real estate markets were close to their best in 5 years or even better than the earlier market peaks in this period.
As per several reports, all these markets are steadily recovering from the slump witnessed during demonetization. The average increase in prices for the period between October and December was approximately 3.1%. The performance of the real estate sector for this quarter is very vital since there were major reforms introduced like RERA and GST. This increase in prices was quantified across a whopping 46% out of 750 top localities in 14 major cities in India. The prices were almost stagnant for close to two years and the first gains were seen in the quarter before this one. This continued for the period between October-December. Sales volumes were at their peak in the last five quarters for markets like Bangalore, NCR, Mumbai, Pune, Ahmedabad and Hyderabad as per reports. Tier II cities like Kanpur, Bhopal, Vadodara, Nashik, Bhubaneswar, Mangalore, Thiruvananthapuram and Rajkot also posted their best sales figures over the last 5 years in this period.
The response is better in metro cities and also the smaller towns and cities in the country. However, demand is majorly skewed towards properties which are ready to move in. Demand is hugely driven by end-users at this time. Smaller Indian cities have benefited from affordable housing projects, comparatively reasonable pricing of properties and incentives offered by the Government for housing for low-income groups. Along with demonetization, GST and RERA have brought in more regulatory structures and improved customer confidence. There is better safeguarding of customer interests and this has brought back many end-users to the sector. This should boost sales volumes in 2018 as well according to experts. The real estate market should be more stable this year since customers and real estate players will be more familiar with all the regulatory changes. The markets will also see prices steadily moving upwards from the low levels seen during demonetization.
However, they will not rise as fast as anticipated and will continue to demonstrate slightly sluggish upward movement as per experts. Cities like Kolkata, Kochi, Patna, Nashik, Jaipur, Vadodara and Bhopal have already witnessed prices moving upwards from levels seen in the quarter ending in December 2016 during demonetization. However, they are still below the levels witnessed in the quarter ending in September, 2016, according to the latest reports.
