New Delhi: Housing market came to a "complete standstill" during October-December 2016 on adverse impact of demonetisation as sales fell by 44 percent in the eight top cities, lowest level since 2010, resulting in Rs 22,600 crore revenue loss to the builders, according to Knight Frank.
The property consultant has pegged the state government's notional loss on stamp duty at Rs 1,200 crore.
Housing sales in residential segment fell to 40,936 units in eight major cities during October-December 2016 from 72,933 units in the year-ago period and 68,734 units in the previous quarter, according to a report released by Knight Frank India. New home launches fell by 61 percent to 24,316 units in the fourth quarter of 2016 compared with the year-ago period.
The Delhi-NCR market was hit hardest with sales volume dropping by 53 percent to 6,765 units in the fourth quarter of 2016 while new launches falling by a massive 73 percent. Knight Frank tracks the primary housing markets of eight cities -- Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.
Housing sales went up in the first nine months of 2016, but the government's decision to scrap the Rs 500 and Rs 1,000 notes in early November pulled down the housing sales in the fourth quarter as well as for the entire last year, it added.
"...the Indian government's demonetisation move on November 8 brought the market to a complete standstill. Against this backdrop, developers refrained from announcing any new launches and buyers turned extremely cautious before committing on purchases," the report said.
All eight cities witnessed a crash, including the usually resilient Bengaluru, during the fourth quarter of 2016 and as a result housing sales fell by 9 percent at 2,44,686 units in the full year 2016 from 2,67,957 units during 2015.
"The residential market of the top eight cities in India started off on a positive note in 2016 with H1 witnessing a 7 percent jump in sales volume compared to H1 2015. H2 2016 also began at the same pace with Q3 2016 sales volume showing a positive growth on the back of the start of the festive season," Knight Frank India CMD Shishir Baijal said. However, he said the demonetisation move pulled down the last quarter sales across all cities.
"The fall in Q4 was intense, H2 2016 ended below H2 2015. 2016 ends at launches and sales being lowest since global financial crisis," Baijal said.
On the outlook, he said the uncertainty is likely to continue in the next quarter.
"In the last two months, there has been an adverse impact on the residential market because of demonetisation. Sales came to a standstill in the eight major cities," Knight Frank India Executive Director and Head Capital Markets Rajeev Bairathi told reporters here.
Asked about the impact of notes ban on secondary (resale) market, he said there were hardly any transactions.