Bid adieu to stressed times
As per Knight Frank’s half-yearly report released recently, new residential project launches hit a seven-year low, dropping 41% year-on-year.
Even though sales have perked up post-demonetisation, especially in the affordable segment, a large section of buyers and have been on a wait-and-watch mode with an eye on the possible implications of the implementation of the new real estate sector regulations (RERA) anchored in a new regulatory body in each State.
While some States have cleared the new rules many others are still in the process. Broadly, however, the regulations will increase safeguards to protect home buyer interest through prevention of diversion of funds, and through imposition of restrictions on inviting public money before receiving the mandated clearances.
The norms welcomed by home buyers have also kept many of them away from the market till the final regulations are cleared.
Buyers are preferring to play safe than be sorry. If this wasn’t enough, the implementation of GST caused another round of uncertainty on the future of realty prices. While some averred that prices would come down, others contended these would inch up.
Given the confusion caused by discordant voices, most home buyers decided to sit on the fence till better visibility emerged.
There is greater visibility and a fair degree of unanimity in the industry today that there won’t be a very significant revision in prices. While prices in the affordable category might come off a bit, those in the luxury segment might get pegged up a notch. This should bring greater stability to the market and help it recover from repeated regulatory impacts spread over a short period. That interest rates are low will aid a recovery in sentiment.
The only cause for concern on the horizon is job creation. The IT services sector is one segment in the spotlight on this. There has been much concern about layoffs in the sector, even though many CXOs of top players have proclaimed that the concerns are exaggerated.
Assuming that the economy starts to perk up once the cloud of uncertainty over GST settles, a recovery in the sector could be a distinct possibility.
Besides, with low momentum in the past 6-9 months, there might just be a short-term acceleration as fence sitters jump back into the market. While there shouldn’t be a rush to close the home deal, there’s also no reason to keep sitting on the fence much longer. It’s time to get back to house hunting for those who’d decided to wait and watch from the galleries.