Time to zero in on your dream house? Launch prices slip in 2015

Launch prices for mid-segment new residential projects have seen a 4-20 percent drop in 2015 in certain micro markets of Mumbai, National Capital Region and Bengaluru, according to Cushman and Wakefield.

One man's meat is another man's poison, so goes the saying. And a quite apt one for the real estate sector. So while news flow from the residential property market remains mixed, prospective buyers seem to have more to cheer than developers for now.

Launch prices for mid-segment new residential projects have seen a 4-20 percent drop in 2015 in certain micro markets of Mumbai, National Capital Region and Bengaluru, according to Cushman and Wakefield.

According to the report, the steepest decline was seen in Mumbai, with launch prices in pockets like Goregaon and Thane falling 20 percent and 18 percent respectively.

In order to push sales, developers are now bringing down the ticket size of their offerings by either reducing unit sizes or by reducing capital values or both.

But it has not been all bad news for developers in Mumbai.

After a long spell of subdued sales, major Mumbai-based real estate companies had a comparatively better festive season.

According to a report by Kotak Institutional Equities, five developers sold over Rs 10 billion worth area each in the December quarter. Oberoi Realty led the pack, followed by Godrej Properties

  with both companies selling projects at premium pricing.

According to Kotak, Mahindra Lifescapes too will enter the much touted Rs 10 billion club through its project in Andheri (E), the project size being smaller than projects launched by peers.

Among unlisted companies, Lodha has sold over Rs 1200 crore of area across projects and Radius Group over Rs 1300 crore of area in two projects in Santacruz (W) and Bandra (E).

Experts say the September quarter too saw an improvement in sales. According to a JM Financial report, quoting data by Liases Foras, sales across eight major cities in India improved by 17 percent, from 57.8 million square feet in Q2 2014-15 to 67.9 million square feet in Q2 2015-16.

"Improvement in sales on low base is clearly a positive development with signal to bottoming out of operational underperformance," says Abhishek Anand, CFA, JM Financial.

"However the break-up still remains skewed towards lower ticket size units implying limited pick up in MMR. We expect time correction in prices and improvement in purchasing power over 1-2 years to drive demand recovery in the sector," Anand says.

With lesser launches and a slowly but surely reviving demand in Indian realty, is the time right now to go and buy a house?

Happy Investing

Source:Moneycontrol.com