Saturday, October 31, 2020

Table of Contents for Realty Biz





Realty Biz

Season for hope

 

The second half of 2015 saw an upsurge in the number of real estate projects launched in Pune.

 

Despite all the negative news that has been emerging over the last 24 months, 2015 saw a substantial upsurge in the total number of residential projects launched in Pune during the year at 1206 as opposed to 758 in 2014, which represents a huge increase of 59 per cent.  The Gera Pune Realty Report for the period July-December, 2015 has highlighted that the prices in Pune’s residential market stayed almost flat with an overall increase of only Rs.21 per sq. ft. representing a 0.43 per cent increase. The overall market average pricing is currently Rs.5096 sq ft. The annual improvement in price for 2015 has been a miniscule 0.7 per cent.

 

According to the Gera report, inventory available for sale (consisting of ready possession and under construction flats available for sale from developers) increased by 55 per cent from 67181 units in December 2014 to 104565 units in December 2015. The inventory for sale stood at 34.29 per cent in December 2015 as compared to 27.94 per cent in December 2014.

 

While the report suggests that there is stress in the realty market, timing the market to perfection is not possible. As stated in a previous report, the expectations of a sharp price correction do not seem to be materialising. Part of the reason why prices continue to be anchored down is the increase in the total supply of projects and the infusion of more number of homes in the market.  The prices are in check because of the significant increase in supply and not because of low demand. The other factor being the demand and purchasing of homes are not keeping in tune with the growth in supply. The rise of gross inventory of 26.81 per cent is significant.  The silver lining however is that sales numbers over the past 1.5 years have been extremely steady this indicates that a large number of home buyers believe that this is the right time to buy and invest in homes.

 

Simultaneously, people’s affordability has risen over the past 24 months.  While home prices have increased only 6 per cent over the last 24 months for the most part, salaries have on an average soared over 20 per cent for the same period. This coupled with lower inflation as well as lower interest rates have left prospective home buyers with increased purchasing power. This certainly bodes well for the industry. The trigger awaited is the switch in sentiment since affordability has already seen an improvement.

 

REPORT HIGHLIGHTS

  • The annual price rise for the year December' 14 – December' 15 was a miniscule 0.7%
  • The total number of projects launched during the same period increased by a whopping 59% as compared to the corresponding period in 2014
  • Surprisingly, sales are largely stable with only 11% reduction as compared to last year clearly indicating that the reputed developers have seen a growth trajectory in sales
  • Only 29.13% of the stock added between July’ 15 to December' 15 was within PMC limits thereby indicating the growth of the city outward



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