Home Sales Likely To Revive Growth In 2013

Bangalore: In India, home sales are expected to revive its growth in 2013 due to fast project approvals and lower financing costs, according to market analysts.

“Residential markets have entered CY13 on an encouraging note, with robust off-take seen in new launches across markets over the last three months,” according to global financial services group JP Morgan’s January report. “We expect volumes in residential markets to improve over the next 12 months on pick-up in pace of new launches coupled with price discounting and mortgage rate cuts,” said the report, as reported by Sobia Khan and Kailash Babar of Economic Times.

In the coming two years, the rate of absorption of new residential units is likely to increase in prime cities like Mumbai, Delhi-NCR, Pune, Chennai, Bangalore and Hyderabad. Adding to it, the rate is expected to increase by 7 percent to 251 million square feet at a compound annual growth rate. Moreover, the real estate market of Mumbai may possibly record the highest compound annual growth rate of 14 percent in the next two years, said the research body.

 “Sales at new projects are showing signs of recovery and a lot of new launches are being worked based on customer responses. Prices may not see any major uptick, but demand is certainly better than last year including in Mumbai and NCR,” said Lalit Kumar Jain, president of CREDAI.

 “In the last four to five years, property price escalated steeply in major metros, but now it has stagnated. The next six months will be a turnaround time for the housing industry with inflation easing and chances of the cash reserve ratio coming down,” said SS Bhatia, General Manager- Punjab National Bank for retail.

Lately, the Reserve Bank of India (RBI) cut down the repo rate by 25 bps to 7.25 percent, generating hopes within potential home buyers.

“Further reduction of interest rate will lead to higher offtake of property. Loan disbursal has been reasonable, but actual recovery will depend on the economy,” said VK Sharma, Chief Executive of LIC Housing Finance, reports Economic Times.

 “Market has started to respond and there is a change in sentiment, especially after the interest rate reduction. For long, there was only anticipation of fall in prices, but now customers are acting upon it,” said Gaurav Gupta, Director of Omkar Realtors and Developers.