Demonetisation hits Pune real estate market
The sales in the real estate sector plunged by over a third and new launches came down by 64% in the three month period from October to December 2016 compared with the same period a year ago.
A study of real estate consultancy firm Knight Frank revealed the drop in transactions post-demonetisation. Knight Frank had predicted in July 2016 that the second-half of the year would see the Pune real estate market bouncing back. And that was exactly what was happening until demonetisation struck the market. Suddenly , all cash transactions dried up and the real estate sales dropped.
A Gera report showed that officially real estate prices corrected by an average of just 1.69% in the last six months of 2016, following a correction of about 2.2% in the first-half of 2016. This price correction estimate by Gera takes into account newly launched projects that are also smaller in size and are launched mostly on the outskirts of the city.
The Knight Frank data is in line with property registration collections at the state registration offices, as reported by earlier.
In the three months ended December 2016, Knight Frank study shows that the sales in the region controlled by the Pune Metropolitan Regulatory Development Authority (defined by the company as areas comprising municipal limits of Pune, Pimpri Chinchwad and areas in the 8-10km vicinity) saw sales of only 6,300 units against 9,748 in the same period of 2015.This was the lowest sales achieved in the market since 2010.
“The demand is falling, but the supply is falling faster, and so there is unlikely to be any significant price movement. For prices to correct, the demand has to be very less over the next four quarters, which is unlikely,” said Shantanu Mazumder, the regional director of Knight Frank’s Pune Branch.