Year 2017 presented a unique scenario to Mumbai realtors; home prices in Mumbai saw a drop for the first time since ten years in 2017 as demand was impacted by the disorder that resulted post-demonetization, a new housing regulation – Real Estate Regulatory Authority (RERA) and the Goods and Services Tax (GST).
The weighted average rates nosedived by 5 percent on an annual basis in 2017, in a report, Knight Frank states, “The trend stems from the periodic deterioration of the market’s health with launches coming to a grinding halt,” said Samantak Das, chief economist of research at the real estate consultancy. This was fueled by builders reducing the prices to sell away their inventory that had not yet been sold, he said.
Prime Minister Narendra Modi’s resolve to dry up almost 86 percent of the currency in use in November 2016 wreaked havoc on cash-driven real estate bazaars in the subsequent months. The government then implemented the Real Estate Regulation Act that safeguards investors against false commitments and bottlenecks and late deliveries. This was followed by enforcement of the GST. The consecutive derangements clamped down the demand. The market has moved in the direction of affordable housing, Knight Frank added.
Some prime highlights of the report are as follows:
- Sale of homes in the latter part of 2017 climbed by19 percent due to the same demonetization that impacted the first half of 2016.
- Roll out of new residential projects plunged by 23 percent annually as developers changed their priorities towards finishing existing projects. Every year, new launches of residential projects dropped by 32 percent.
- Inventory waiting to be sold in Mumbai fell by 25 percent since 2017, primarily due to a reduction in launches.
- Home realty sector’s new projects across eight Indian cities fell by 41 percent annually with Hyderabad registering the deepest drop of 70 percent, then the National Capital Region at 56 percent, Bengaluru at 41 percent, Pune at 37 percent and Mumbai at 32 percent.
Sale of homes dropped to 7 percent annually in 2017, when the eight premium cities seeing a drop in sales due to measures like RERA and Pradhan Mantri Awas Yojana have still not made efforts to fuel customer mood.
With respect to sale, the Mumbai market registered a 19 percent rise in the latter-half of 2017. However, the general volume of sales shows a downward trend.