Housing demand has reportedly crashed across the top eight cities in the fourth quarter of 2016 post demonetisation of Rs 500 and Rs 1,000 currency notes by the Reserve Bank of India.

Housing demand (absorption) across key cities declined by 31 per cent, largely on uncertainty post-demonetisation, which led to very few transactions materialising in both the primary and secondary markets, according to a report by real estate data, research and analytics firm PropEquity.

The report said the new launches fell by 40 per cent as developers across cities are waiting to gauge the true extent of demonetisation impact on real estate before launching any new projects, they now expect market to stabilise post the Union Budget announcement providing some relief, especially in the affordable housing segment.

Eight cities were included for the study, including Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai.

Also, during Q4 2016, cities with significant inventory overhang have seen a slight contraction in prices as developers were compelled to reduce prices to clear off high inventory.

NCR cities, namely Gurgaon and Noida, exhibit this trend to a great extent.

“The real estate sector in India, especially housing, is going through a critical transition phase post demonetisation as transaction activity has slowed down considerably. In our view, the RERA implementation, Benami Act and a further push for smart cities across India will bring major respite to the ailing realty sector. Going forward, developers with a good track record, strong financials and low leverage to external debt are expected to bounce back quicker,” Samir Jasuja, Founder-CEO, PropEquity said.

The report further states that average prices of unsold units remained stagnant at Rs 6,683 per square feet as buyers and sellers delayed their decisions.

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