Real estate in India has been facing bad times for a long time now, particularly post the global financial crisis of 2008. However, the policy paralysis, that began in 2012 and continued till 2014, impacted it much. Home sales experienced a dwindling trend in these years followed by change of regime and policy disruptions. A series of unprecedented reforms like RERA and the Black Money Act implemented in the new regime also disrupted the residential market, which is not out of the woods yet in terms of sales volume. Thankfully however, some industry reports predict that the housing sales volume is likely to regain the levels seen in 2013 in a few quarters from now.
A JLL India report, for instance, says that although there is pain in the market, the current slump may be over in the next few quarters. That is because homebuyers are back in the market and the prime markets of the nation signal a recovery in residential sales.
"One significant yet overlooked trend is the continuous growth in residential sales post 2017 amidst the slowing economy and subdued consumer sentiment. The declining trend in residential sales stabilised after 2017 when sales gained traction in 2018 and reached 1.15 lakh units in the first nine months of 2019. However, the recovery has been gradual and the quantum of sales is still tad below the 2016 levels. The sales volume seen in 2013 could well be achieved in the next few quarters," states the JLL report.
Some industry experts are also of the view that there is light at the end of tunnel. However, they believe that touching the peak sales levels in the near future seems unlikely.
Anuj Puri, Chairman, ANAROCK Property Consultants, says, "The most recent ‘golden age’ of the Indian housing market actually came in 2014, when residential absorption rose to 3.5 lakh units. This was the best period between 2013 and 2019. However, absorption reduced to 2.1 lakh units in 2017, immediately after DeMo. In 2018, housing sales rebounded to 2.25 lakh units, which was definitely way under the peak levels. It, however, looks very unlikely that we will get close to the peak sales period anytime soon."
"While end-user demand has definitely made something of a comeback, this demand will not suffice to bring us back to the 2014 levels. That would require a decisive return of interest from investors, which is currently very conspicuous in its absence," he adds.
In fact, the regulatory reforms which induced the slowdown on the Indian housing market were necessary ‘evils’ as the government had set itself the gargantuan task of sanitizing the sector of unwholesome practices. These practices included speculative buying and selling of homes by investors who bought and sold in bulk. They were aided by the unrestricted flow of black money into the sector, which – at least in the primary sales segment – has been massively curtailed, thanks to these reformatory changes. In short, speculative investors are off the market, and without them attaining peak levels will be difficult.
However, "we should not be aiming at peak levels which were induced by unnatural market behaviour. Instead, we should look for a steady and sustainable revival in sales led by end-users and serious long-term investors. This now seems to be happening and it cannot come a moment too soon," says Puri.
Whatever be the case, property developers believe that the good old days of the residential market may return soon.
"Last few years have been subdued for the real estate market which has disturbed both developers' and buyers’ sentiments. Policy reforms introduced by the government in order to put a transparent and organized system in place are helping the sector gain the buyers’ confidence back. Considering the present scenario, on-time delivery and quality construction are the topmost priority for developers working on projects," says Ashish Sarin, CEO, AlphaCorp.
On the one hand, "RERA has helped in reviving buyers' confidence and on the other hand, it has laid down stringent penalty clauses for overdue projects. This will help increase the delivery of projects in a dedicated timeline. According to a recent report by ANAROCK, the highest number (68,070) of ready-to-move-in homes will be delivered in the National Capital Region till 2020. This shows that the housing segment is heading for revival," adds Sarin.