Home sales drop by 16 percent in 2012: Knight Frank report
New Delhi- High property prices and rising interest rates of home loans during 2012 have brought down demand for properties in India. In the top six cities of India, the housing sales have dropped by 16 percent to around 2 lakh units in the previous year, revealed a report by property consultant Knight Frank.
Many developers were reluctant to launch new residential projects as a result of which the launches in 2012 dropped by 30 percent.
Knight Frank researched six real estate markets of Delhi- NCR, Mumbai, Pune, Bangalore, Hyderabad and Chennai. The overall residential market in these cities was affected by high property prices, relatively higher mortgage rates, weak employment scenario and business sentiments.
In these six cities, 2,41,811 homes were launched in 2012 as against 3,43,142 residential units in 2011. Absorption of homes dropped to 2,09,787 units in 2012 from 2,49,127 homes in 2011.
Home sales in the top six cities in 2012 decreased by 16 percent, reports the consultant.
A close study at the gap between the launch and the absorption numbers makes it clear that builders and developers have become more rational in launching their projects, says the report. The gap has reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011, respectively.
During 2010 to 2012 period, NCR led the residential market in terms of absorption as well as launches. NCR and Mumbai together accounted for nearly 60 percent of total absorption rate of residential units, where NCR witnessed 37 percent, Mumbai 23percent, followed by Bangalore (13 percent), Pune (11 percent), Chennai (9 percent) and Hyderabad (7 percent).
The credit exposure of banks to developers has come down from its top growth rate of 23.21 percent in June 2011 to 3.88 percent in September 2012.
Housing loans given out by banks have consistently grown since July-2010, but residential real estate growth has slowed down significantly since June 2012. Besides residential realty, growth of commercial real estate sector too has diminished from a high growth rate of 23.21 percent in June 2011 to 3.88 percent as per the latest reported data on September 2012.
As per the report, NCR residential real estate is expected to stabilize in 2013 due to new and controlled supply in the region which would keep a check on unsold properties in the inventory. It adds that the prices of properties in Mumbai would remain constant owing to unsold inventory and increasing share of peripheral markets.
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