Residential market remains sluggish, pricing largely stable

Residential market remains sluggish, pricing largely stable

Despite price movements remaining stable, home buyer demand remained low during the year 2015. 

  • February 18, 2016  
  • |  
  • UPDATED   13:50 IST

According to CBRE's India Residential Market View for H2 2015, residential demand during the review period remained sluggish, with housing sales dipping by around 17% as compared to H1 2015.Despite price movements remaining stable, home buyer demand remained low during the year due to existing high price points coupled with a cautious buyer sentiment. 

On the other hand, housing sales in the leading southern cities during 2015 continued to be driven by demand from the growing IT/ITeS workforce in the region. Majorityof the housing demand here, remained concentrated in the high-end / mid-end segments, with limited transaction volumes noted in the premium / luxury segments. 

For the second half of the year, the top three cities of Mumbai, Bangalore and Delhi National Capital Region (NCR) observed more than 65% of the total housing sales noted across the country's leading cities.

Hyderabad and Mumbai noted an uptick in housing sales during H2 2015, even as most other housing markets saw subdued sales. While sales in Mumbai increased due to a surge in demand across the city's developing suburbs, political stability in Hyderabad led to a corresponding rise in home buyer demand.

Commenting on the findings of the report, Mr. Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, "Despite the muted buyer interest noted in the housing market for much of last year, I feel that 2016 holds the promise of a market revival on the back of Government initiatives in the right direction. Apart from its renewed focus on large scale urban infrastructure and development of affordable housing, the Central Bank, for its part, remains accommodative towards further easing of interest rates. I believe these moves could help spur property purchase decisions, propelling the market forward."

Most new housing project launches during the second half of 2015 remained focused towards the mid-end segments, primarily in secondary and peripheral neighborhoods of key cities. Mumbai led new project launches during the second half of 2015, accounting for more than 35% share of the total supply of new housing units among leading cities.

Bangalore and Delhi NCR had a share of 28% and 11%, respectively, of the new property launches seen during the period across leading cities. 

"Going forward, an uptick in home buyer demand will most likely be driven by the mid-end and affordable housing segments in 2016, concentrated mostly across secondary and peripheral locations of leading cities. Owing to the demand slowdown in the market and a decided shift in home buyer expectations, developers are likely to focus on the timely delivery of their ongoing projects.

Developers are also expected to remain increasingly flexible on pricing and payment structures, while right-sized and well-priced projects will continue to attract demand across India's leading cities," said Mr. AS Sivaramakrishnan, Head - Residential Services India, CBRE South Asia Pvt. Ltd.

Property prices in premium / luxury segments across leading cities remained stable-except for Bangalore and Delhi NCR. While Bangalore sawa price rise across key micro-markets owing to sustained demand and limited availability of premium housing units in these locations, Delhi NCR noted a marginal pricing dip of 2-4% across select neighborhoods.

Prices across high-end / mid-end segments also remained stable across most leading cities, except for Hyderabad and Delhi NCR. 

Meanwhile, Bangalore noted a rental value rise of 2-10% in the high-end / mid-end segments in H2 2015 over that of the first half, along with a half-yearly rise of 5-10% in the premium / luxury segments across select micro-markets. Delhi NCR, however, saw a marginal rental drop of 2-3% around Greater Noida Expressway, mainly due to high availability of apartments for rent at an affordable price range.