Home buyers still cautious: Diwali 2014 fails to bring cheer for real estate sector

Despite recovery in marketconditions and sentiment, this festive season has failed tobring in cheers to the real estate industry as home buyerscontinue to remain cautious, according to industry experts.

Festive season is generally considered as the mostimportant time for the realty sector as it records the highestnumber of sales, which is nearly 20-25 per cent more thannon-festive period.

“The real estate industry has always witnessed a rise insales during the festive season especially on the back offreebies and incentives offered by the developers. However,despite recovery, there is no improvement in sales duringthe festive season,” IndiaProperty.com Chief Executive GaneshVasudevan told PTI e today.

He said, “the demand from property buyers has increasedcompared to the last few quarters. This is witnessed from thenumber of enquiries we are receiving. But this is nottranslating into actual transactions as buyers have adopted await and watch approach.“According to Jones Lang LaSalle India Chairman andCountry Head Anuj Puri, though there is a recovery insentiment, the events that have catalysed it - namely the newgovernment at the Centre and “its pro-business policiesfavouring realty”- will need more time to bring their benefitsto bear on the market.

“While demand exists, it is still held in abeyance byvarious economic factors, including the natural lag betweenthe announcement and implementation of the government policycatalysts,” he said.Likewise, the Reserve Bank has held on to current
interest rates in favour of safeguarding against furtherinflationary trends.“It will take several more months for the market to getinto convincing forward momentum again.. the festive seasondid not bring the kind of momentum that was hoped for,” Puri
added. “There is also an expectation that home loan rates maycome down in the next 2-3 quarters as the government is takinginitiatives to tame inflation. If the interest rates comedown, we will see a surge in sales from the second or thirdquarter of 2015,” Vasudevan noted.

Developers, on the other hand, have been addressing thesituation by offering selective discounts and incentives, thesuccess of which has varied across cities and locations. Thosewith greater holding power continue to wait for the market topick up so that sales velocity will accelerate, Puri said.“During the festive season, developers generally launchnew projects as well as offer various incentives to attractbuyers. However, over the last few quarters, there has been aslowdown in new launches as the inventory levels itself arevery high,” Samruddhi Realty Chief Executive Madhusudan Ksaid.

He further said developers are currently concentrating onclearing the inventory and are offering discounts and otherincentives to attract buyers.

PTI