The Hindu Business Line : Housing sector growth hits trough as investors shy away

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Housing sector growth hits trough as investors shy away

S. Shanker

7-10% price correction seen six months down the line

SIGNS OF A SLOWDOWN?

Mumbai June 11 The country's home real estate market is showing signs of hitting a trough.According to the Mumbai Chapter of the Builders Association of India, which confirmed a slowdown in housing stock sale over the past two-and-a-half months, the drop is as much as 25 per cent.

The Association Chairman, Mr Anand J. Gupta, told Business Line that the profits that the builder fraternity had booked during the last 2-3 years had helped them hold on to their stocks without opting for a price reduction.

"It is the high price line over the past three years that has given builders the resilience to hold on so far," he added.

Discounts

However, there are reports of builders in the mid-size segment willing to offer discounts and freebies such as free parking space and waiver of the per-floor-rise price to promote sales.

High land prices in metros have, to a great extent, pushed builders and developers to focus on large projects in tier-II and tier-III cities, besides the far-flung suburbs of tier-I cities where they are creating self-contained satellite townships.

Mr Gupta does not rule out a 7-10 per cent price correction six months down the line when he expects the industry's resilience to fade.

Mr Kapil Wadhawan, Vice-Chairman and Managing Director of Dewan Housing Finance Corporation Ltd, said that the sales dip is a temporary blip on the realty horizon.

Concurring with Mr Gupta that sales had "slackened a lot," he said that it was good for prices to stabilise since they had skyrocketed in many places.

Optimistic on the construction industry's inherent strength to bounce back, he said that the temporary phase would not last long.

"We are looking at 25 per cent growth and our clientele are essentially first-home buyers, in tier-II and tier-III cities," he said, adding that the builders' decision to hold on to stocks was a little unwise at the present juncture.

"It will be prudent that they sell even at 15 per cent discount rather than hold on and wait for a turnaround."

A senior HDFC spokesperson said that there has been no dip in sales on the home loan front. The situation has been brought about by investors shying away - more of those who wanted a second home - unwilling to take a plunge now.

He said that the home loan growth rates were very much on the right track, moving upwards. However, the high-end luxury housing segment has apparently been spared the heat. Mr Vishwajeet Jhavar, CEO of Pune-based Marvel Realtors and Developers Ltd, said: "We have not seen any drop in sales and have takers for our proposed projects in the pipeline as well."

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