Property analysts have predicted that, by March next year, the demand for plots, houses and flats may drop by at least 15 to 20%.
Despite aggressive marketing and great offers made by developers on the eve of Diwali festival, investments in the property sector have remained lukewarm due to high prices of houses in and around the NCR region. Major factors cited have been high prices of land and the unprecedented rise in the cost of construction materials, iron, cement, labour,etc., says a survey by ASSOCHAM.
There has been a surge in demand of only 20% on the eve of the festival when compared to the usual average sale per month. Builders and investors express their disappointment and say that, like in the past, they had been expecting a 100% jump in both new and the huge inventories lying at the disposal of the developers on the festival seasons.
The survey was carried out in major cities like Delhi-NCR, Mumbai, Bangalore, Chennai, Kolkata, Ahmedabad, Hyderabd, Pune, Chandigarh, Dehradun etc. The survey was able to gather information from 250 property dealers, 40 noted builders / developers and 20 divisions of housing financing.
A majority of developers have complained that inordinate delays in getting the necessary approvals from multiple regulations and authorities result in cost and time overruns. Another factor reported was the apathy of banks in financing real estate projects in the absence of industry status, adds the ASSOCHAM survey.
The resale or secondary market was dull this festival season as there was very little resale going on, especially in the NCR and surrounding areas which shows that very few investors are there in the market, said ASSOCHAM Secretary General DS Rawat while releasing the survey.
Property analysts have predicted that, by March next year, the demand for plots, houses and flats may drop by at least 15 to 20%.
Housing inventory in the NCR area is huge as a large number of projects are coming up in the peripheral areas, said Rawat.
Rawat also said although the prices had generally remained stable - both for commercial and residential properties - the lack of buoyancy and weak investor sentiments have added to the woes of developers.
The ASSOCHAM report said the government should act as a facilitator rather than a regulator of the real estate projects, particularly where demand is more than supply. Also, all approvals of real estate projects must be accorded in a time bound, accountable and simplified manner. Process and status of all approvals be made on line so as to bring transparency. The state governments should complete their land records process, and make the same computerized. Supporting infrastructure; not only transportation and logistics but also water, power, housing, healthcare and sanitation; must be taken up in tandem.
The government must grant industry status to the real estate sector, and real estate projects must be classified as infrastructure, and priority lending should be made available for keeping pace with the demand and supply scenario. (INN)