Indian Real Estate Sector Outlook by ANAROCK Property Consultants
The Indian festive season, ushered in by Ganesh Chaturthi, has begun and investment decisions are being made. For homebuyers, this period is both auspicious and opportune to buy homes because real estate developers inevitably roll out attractive incentives - either in the form of price reductions, money-saving opportunities like waived stamp duty and registration charges, or 'white goods' like furnishing and household electronics - to attract genuine buyers.
This year, the government has already done a lot of the heavy lifting when it comes to sweetening the deal for homebuyers. The slew of measures announced over the past two weeks, primarily to boost consumption, have both direct and indirect benefits for homebuyers and have already set the stage for the last quarter of the calendar year to witness increased housing sales. These measures alone will result in housing sales increasing by between 5-7% in Q4 2019.
So far, the policy-induced impetus will primarily attract end-users - buyers looking to purchase homes for their personal use. However, it is no secret that end-user sales alone will not suffice to revive an industry which has historically depended on healthy investor activity to drive sales momentum. With this in mind, the government is expected to come up with additional exclusive measures for the real estate sector – expected anytime soon – then it could boost the confidence of investors too.
How Previous Festive Seasons Fared
Traditionally, the festive quarter fares better than the previous quarters of the year when it comes to housing sales - the combination of religious sentiment and festive deals and freebies is a potent mix during this part of the year. For instance, Q4 2015 saw 70,000 homes sold in the seven major cities. However, as tempting as it was for developers to believe that this was an unshakeable performance standard, it was certainly shaken just a year later. After demonetization (DeMo) was announced in this critical quarter in 2016, housing sales halved to 32,100 units.
The implementation of RERA in early 2017 set the stage for another about-turn, with the last quarter of 2017 witnessing a 44% surge in housing sales. This trend was fortified in the festive season quarter of Q4 2018 with 69,900 units sold in this period.