Aug 3, 2014
According to a study, residential property prices are expected to increase in the H2 of this year, owing to improved market sentiment due to a stable government at the Centre.
Through the past two years, new project launches, as well as sales, have been hit by a slowdown.
The Federation of Indian Chambers of Commerce and Industry-Knight Frank Real Estate Sentiment Index for April-June this year said that “But this will improve in the next six months.”
Mr Samantak Das, chief economist and director (research), Knight Frank India, said that “Housing prices are expected to go up during the H2 of 2014, with an average increase of 5% to 8%. It might go up as much as 15% in certain micro markets.”
Mr Shishir Baijal CMD of Knight Frank India said that “The fact that political stability has a perceptible effect on the real estate sector is quite apparent from the optimism shown by stakeholders post the elections.”
The index, based on a survey of various stakeholders, including developers, private equity firms, banking and non-banking financial firms, rose six points to 69, the highest since its inception three quarters ago. This is the only real estate index released by a private consultancy firm. Government-owned National Housing Bank (NHB), too, brings out a residential index.
While the NHB index, brought out every quarter since July 2007, is based on home loans from banks and financial institutions, the Knight Frank index is based on the sentiment in the sector.
An expert said that while Knight Frank’s sentiment index is based on the supply side, the one by NHB captures the demand side. Many primarily relied on NHB data, as these captured buyer activity across major cities.
The Knight Frank survey said that the market was significantly optimistic about the residential sector, with 62% of the respondents saying housing prices would rise in the next six months, against 14% in the previous survey. More than 80% of the respondents felt residential project launches and sales volume would improve in the coming six months.
Mr Das said that “With the backdrop of a stable government and high expectations of faster decision-making and positive reforms, respondents have a positive outlook on the residential sector, in terms of sales and launches.”
The survey said that scores on sentiment rose across regions, with the North being the most upbeat. A total of 75% of the respondents anticipate the availability of funds to be better in the next six months.
In the office segment, about 75% of the respondents believe leasing volume will see a surge by the end of 2014.