[ecis2016.org] Even as the number of project launches is likely to rise in the affordable housing category, in the next few quarters, the demand for residential properties is unlikely to revive in the next 12-18 months, says CRISIL
According to rating agency CRISIL, the demand for residential properties is unlikely to revive in the next 12-18 months, as the fundamental problem of lack of end-user buyers, is unlikely to change any sooner. CRISIL’s analysis shows that home sales in the top 10 cities like Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai metropolitan region, NCR and Pune, have declined at a compound annual growth rate of eight per cent since 2011.
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“The trend appears set to last well into fiscal 2019 or beyond, portending more pain for developers,” CRISIL said. High property prices have turned end-users into fence-sitters, in most micro-markets, it added. Also, concerns over job losses and lack of employment opportunities, are curtailing income visibility required for a housing loan, which is typically for a long tenure, keeping away buyers. According to the agency, rentals are being preferred to buying a property and many nuclear families are opting for rental accommodation in suburban locations, rather than purchasing a house in a peripheral micro market.
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“There are risks associated with delivery of under-construction projects, especially delays in getting possession from the developers, which deter buyers,” it said. The agency further said that the participation of the investor community has reduced significantly, on account of falling returns on the asset.
CRISIL Research senior director Prasad Koparkar, however, said the next few quarters will see more launches in the affordable housing category, or projects with smaller configurations, leading to a reduction in the overall ticket size. “That, along with falling interest rates and a supportive credit-linked subsidy framework, will benefit end-users because affordability will improve. We are also seeing prices hovering at current levels, on account of weak demand and moderation in new supplies,” he added.
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