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Indian Real Estate News : Sonepat
Demand drops for affordable homes, up for luxury: PropIndex
Source: The Times of India Jul 30, 2014
With buyers and developers adopting a wait and watch attitude during the Apr-Jun 2014 quarter, the real estate markets across the country remained subdued. This was reflected in the current edition of PropIndex (Apr-Jun 2014).

With limited fluctuations observed in the demand and supply matrix, the City Index in different cities remained largely stable except in Delhi. This in turn arrested growth of the National Property Index (NPI), which inched up by just one per cent this quarter.

As opposed to the Jan-Mar 2014 quarter when the City Index graph was more dynamic, cities such as Gurgaon, Chennai, Bangalore, Kolkata and Pune recorded a rise of just one per cent, in the Apr-Jun 2014 quarter. A similar drop of one per cent was noted in Ahmedabad and Hyderabad. Mumbai, Noida, Ghaziabad and Vadodara, on the other hand, recorded a stable index. Delhi was the only exception with a drop of four per cent noted this quarter.

Affordable v/s luxury

Demand statistics at the national level indicated negligible buyer interest for properties in the range of Upto Rs 20 lakh. This was visible across cities, where demand for these properties remained low to negligible (1-5%). However, as opposed to the common notion that these properties are under-supplied, an over-supply was noted in the category. While supply in this category led demand in all cities by various margins, the difference was particularly high in Chennai and Hyderabad (17-19%).

In contrast, demand for luxury properties at the national level inched up, with 40 per cent buyer interest for properties priced at Rs 1 crore and Above. However, even though demand has moved up, the luxury segment remained over-supplied in almost all cities. Noida, Gurgaon and Ghaziabad were the only exceptions. While in Noida and Gurgaon, supply matched demand, in Ghaziabad supply lagged behind demand by 11 per cent.

The Rs 30-50 lakh category continued to garner maximum demand at the national level with 25 per cent buyers seeking properties in this category.

Rental markets stabilise across cities

Another trend noted in this quarter's PropIndex was that rental values across cities either dropped or stabilised. As opposed to the Jan-Mar 2014 quarter, where rental markets had witnessed an increase of 5-10 per cent approximately, slightly improved consumer sentiments saw an increase in sales enquiries. This resulted in a drop of 5-6 per cent in demand for rental properties, across cities, in different localities.

The recently announced Budget 2014 addressed several pressing issues of the housing sector and has infused some positive sentiment in the market but the real impact would be visible only after these measures are implemented.

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