Prices for home buyers are anticipated undergo substantial reductions, potentially decreasing by 12-17% in specific markets over the upcoming months, based on a recent survey. Developers are actively exploring strategies to diminish existing stock and stimulate sales in the near term to address financial shortfalls.
Price Reductions Expected
It is projected that by Diwali of the following year, property values could decrease by 12-17% within the Delhi-NCR region, Mumbai, in addition to other upscale markets. Nevertheless, the overall real estate sector exhibits a flat trajectory, and the introduction of new projects has been notably limited recently.
Secondary Market Trends
In the secondary market, while listed prices have been reduced, sellers are largely maintaining previous rates.
Price Stagnation and Fluctuations
Since the prior Diwali, property values have largely remained stable or undergone only minor increases. Data from the first quarter indicates that cities such as Gurgaon and Mumbai experienced price increases of 10% and 5%, respectively. Conversely, another data set reveals that prices in 26 cities, encompassing Delhi, Bangalore, Chennai, Pune, and Nagpur, declined during the same period compared to the preceding one.
Developer Strategies
The decline in prices suggests that developers are increasingly willing to accept margin reductions, facilitating the clearance of substantial inventory backlogs, improving liquidity, and boosting overall demand.
Inventory Overhang
Mumbai currently holds an approximate inventory of 45 months, the National Capital possesses 25 months, and Bangalore has 26 months. Real estate enterprises grappling with economic deceleration are heavily reliant on the festive season to drive sales. The industry is actively engaging prominent personalities and athletes to promote projects nationwide.
New Launch Declines
Between January and July of the current year, the introduction of new projects has significantly decreased, ranging from 35% to 62% in major markets including Gurgaon, Mumbai, Pune, Noida, and Kolkata. In general, new launches in major cities this year have decreased by 16%, totaling 188,348 units across various segments.