Home buying picks up as prices continue south- The New Indian Express

Express News Service

People buying cars and homes are sure shot bell-weather indicators of positive consumer sentiment. The initial numbers are good for the current Diwali and festival season offering some hope to the beleaguered industry. Festival sales in both the automobile and housing markets are higher than both the previous quarter and the one-year- ago figures. Expectedly, business pundits have seized on these numbers to illustrate the end of a dark phase.

These are speculative conclusions as Diwali, considered an auspicious time to buy big ticket products like a home or a car, cannot be taken as a persisting trend. Be that as it may, it is reassuring to read the pile of market reports showing sales and demand picking up for home buying. An Anarock Property Consultants survey showed that the third calendar quarter for 2020 had Mumbai Metropolitan Region (MMR) and Pune showing the highest spike in sales among metros – MMR up by 36 per cent (9,200 units) and Pune 34 per cent (4,850 units).


tapas ranjan

Anarock chairman Anuj Puri put it down as a good response to deep discounts and innovative offers by developers, coupled with lowering of stamp duty by the Maharashtra government to just 2 per cent till December 2020 and 3 per cent between January-March 2021. “The overall financial benefit amounts to a reduction of anywhere between 7-15 per cent on the total property cost,” Puri claimed. Another report by a real estate research firm Liases Foras said sales had almost doubled in the July-September quarter. Tier I cities, the report said, had recorded sales of 42,297 units, a 60 per cent increase from the immediately preceding April-June quarter when sales were just 26,403 units.

The Liases Foras report also said unsold stock had dipped 3 per cent for the top 8 cities, and stood at 9.3 lakh units due to fewer launches. In statements accompanying the release of the report, the Liases Foras chief, Pankaj Kapoor, said housing was now a buyers’ market “driven by the offers and payment flexibility doled out by developers. It is almost after 15 years that everything is favouring the buyers.” The problem with these realty reports is their credibility. Unlike the Society of Indian Automobile Manufacturers (SIAM) that collates and releases periodic data related to sales of cars and other automobiles, developers rarely part with genuine sales data. Most of these reports are produced by realty brokers like Anarock or a Knight Frank. They are interested in hyping deals, and there is an obvious conflict of interest.

No wonder, most of these reports are not taken very seriously. Even Liases Foras, which claims to be a ‘non-broking real estate research company’ does not reveal the source of its data and how it has been collated. Most of these ‘surveys’, while projecting sales figures, seem to paper over the continuous fall in capital values of all categories of property. Higher sales are helped by lower stamp duty, but the biggest trigger is the continuous fall of property values to more affordable levels. Across the board, anecdotal data shows housing and commercial properties have fallen 10-15 per cent over the last year, and they continue to trend downward.


A statement in the Liases Foras report—“Price in the consolidated tier I cities remained same on both QoQ and YoY basis”—is not true. A 2BHK in Mumbai’s Parel area, which was in the `4-6 crore range a year ago, has shed anything between `75 lakh to `1 crore, and even these lower prices continue to go south. A discussion with locality brokers in South Mumbai reveals that in many urban areas today prices are 20 per cent below the Ready Reckoner or Circle Rate (property value ascribed by government on which Stamp Duty is levied).

The gap is so wide that property registrations have been hit due to the unreasonably high Circle Rate. A registered deal at current prices will also run the risk of being investigated as there will be suspicion that part of the consideration has been received in cash. Though the National Housing Bank (NHB) and the RBI collate and release housing data, there is no independent monitor that collects and processes home-buying realtor data. The housing market is therefore always a guessing game of approximations. The information/data handicap notwithstanding, housing will continue to be a buyers’ market for some time in the face of high joblessness.

A recent Reuters poll of 15 analysts between September 15 and 29 predicted average house prices to shrink six per cent this year, and three per cent next year. A similar poll three months earlier predicted the price fall this year to be five per cent and three per cent next year, which means the sentiment has marginally worsened. This is good from the consumer’s point of view. Those hunting for a house should wait a while as home prices will be cheaper 6-8 months down the line.

Market rates far below prescribed circle rates

The gap between the Ready Reckoner or Circle Rate (the property value ascribed by the government on which Stamp Duty is levied) and current market prices is so wide that property registrations have been hit due to the unreasonably high Circle Rates. A registered deal at the current prices will also run the risk of being investigated as there will be suspicion that part of the consideration has been received in cash.

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