The double blow of demonetisation and the new Real Estate (Regulation and Development) Act compliance dragged down housing sales in Delhi-NCR by 26 per cent in the first half of 2017, despite a 20 per cent price cut over the past 18 months, according to a Knight Frank India study released on Wednesday.
The region has the highest amount of unsold property-- a staggering 1.8 lakh units-that is expected to take developers four-and-a-half years to sell.
Only 17,188 units were sold in the first half of 2017, compared to 23,092 units in H1 2016. However, housing sales improved by two per cent compared to the previous six months, which saw the lowest half-yearly sales on the back of demonetisation.
New launches dried up in Delhi-NCR, registering a sharp fall of 73 per cent -the second highest after Ahmedabad's 79 per cent. Only 4,800 units were launched in the first six months of the financial year. About 70 per cent of them were below Rs 25 lakh, signalling a shift towards affordable housing.
"NCR housing market is passing through its worst phase. There seems no end to it," said Knight Frank India executive director Ghulam Zia. He said the fall in launches were due to slowdown in demand and builders' focus on completing existing projects due to the new Real Estate (Regulation and Development) Act (RERA).
The Act passed last year seeks to bring clarity and fair practices to protect the interests of buyers and also impose penalties on errant builders. According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator.
"Going ahead, the GST will bring more down the cost of construction for the developers, but it remains to be seen whether they will pass on the benefit to the consumers or not.
RERA, on its part, will usher in transparency. Global investors are now looking at the Indian real estate sector as an attractive proposition given the regulatory / policy changes," said Zia. He added that prices have fallen by 20 per cent in Delhi-NCR in the last 18 months and rates are likely to fall further or remain stable in the shortterm.
Zia also advised investors to refrain from buying a house. "Do not buy a house if you are an investor. If there is a need for a home you can buy. You sell only if you are in distress, which developers are."
The 'India Real Estate - Residential and Office' report for January-June 2017 tracked the realty sector's performance in NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata,Pune and Ahmedabad. The report said sales across these cities hit a seven-year low during the six months at 1,20,755 units -down 11 per cent as compared to the corresponding period of the previous year.
New launches, too, hit a seven-year low, crashing 41per cent year-on-year to 62,738 units during the period under review. The decline was 9 per cent compared to the demonetisation period of H2-2016 when 68,702 units were launched.