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New home launches plunge 78% in 2017

13 January 2018

The capital city recorded the highest-ever office transaction (3.34 mnsqft) in a six-month period during (July December 2017).

"Apart from the base price reduction, which developers have been forced to undertake in order to prioritise offloading inventory level, a bouquet of incentives such as waivers, free of charge floor rise and assured rental schemes, which are available a dime a dozen in the market lends significantly to the price advantage", said Das.

Das said that "in terms of sales, the Mumbai market recorded 19% uptick in H2 2017 over the demonetisation-hit same period a year ago, however overall sales volumes reflect a declining pattern".

"At the end of 2017, India's residential sector appears to have shrunk to a fraction of its size in less than a decade", according to Shishir Baijal, chairman and managing director of Knight Frank.

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The study said that the effective prices in the organised residential projects in the city have dropped to the extent of 12 per cent, which included a slash in the base prices charged by the developers along with waiver of other charges like stamp duties.

Home launches hit an all-time low during July-December 2017 with a meagre 940 units entering the market an 84 per cent drop over the corresponding period in 2016. In Mumbai, unsold inventory declined 25 per cent to 1,15,964 units. That's great news for homebuyers because average asking prices in the Chennai residential real estate market have come down by 3% since 2016.

During the second half of the year gone-by, Hyderabad recorded the steepest fall at 84 per cent. There is no data available to suggest that prices have dropped to this extent of 12-13 per cent as suggested in the report taking into discounting and quoted prices but increased holding and financing costs in addition to increased wages and regulatory costs suggest that this is a bottom and once the unsold stock is down to manageable proportions the prices in fact might increase post this quarter.

Homebuyers have a narrow window of opportunity though, because the West Bengal Housing Industry Regulation Bill (HIRA) 2017, already passed by the State Assembly past year, is expected to be notified soon. The age of unsold inventory is a matter of concern, said Krishnan.

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Home launches in 2017 plummeted by 78% from the peak of 2010, according to Knight Frank India Real estate report.

The report notes that for the first time, the sector witnessed price correction in 2017.

As per the report new office space supply hit double digits for the first time since 2012, 76% higher YOY.

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New home launches plunge 78% in 2017