Home sales could rebound in 2013 helped by quicker approvals and lower finance cost

Date : Feb 7, 2013

BANGALORE | MUMBAI: Home sales in India could rebound in 2013, helped by quicker project approvals and lower cost of finance, according to analysts.

"Residential markets have entered CY13 on an encouraging note, with robust offtake seen in new launches across markets over the last three months," global financial services group JP Morgan said in its January report. "We expect volumes in residential markets to improve over the next 12 months on pick-up in pace of new launches coupled with price discounting and mortgage rate cuts." 

According to CRISILBSE -1.34 % Research, absorption of new residential units across six key cities - Mumbai, the National Capital Region, Pune, Bangalore, Chennai and Hyderabad - is expected to increase at a compound annual growth rate (CAGR) of 7% to 251 million sq ft in the next two years. During this period, Mumbai is expected to record the highestCAGR of 14% due to pent-up demand, while capital values across regions are expected to rise marginally in the second half of 2013, the research body said. 

The projection is a contrast to numbers reported for last year. According to JP Morgan, sales of residential units across major markets like Mumbai and NCR had dipped between 7% and 38% in first three quarters of 2012. Only Bangalore and Kolkata bucked the trend, recording growths of 3% and 6%, respectively. 

"Sales at new projects are showing signs of recovery and a lot of new launches are being worked based on customer responses. Prices may not see any major uptick, but demand is certainly better than last year including in Mumbai and NCR," said Lalit Kumar Jain, president of developers association CREDAI, which has about 10,000 members. 

Backing the estimate is state-run lender Punjab National BankBSE 0.13 %, which has seen a 14% growth in home loans in the last quarter. "In the last four to five years, property price escalated steeply in major metros, but now it has stagnated. The next six months will be a turnaround time for the housing industry withinflation easing and chances of the cash reserve ratio coming down," said SS Bhatia, its general manager for retail. 

Source : http://economictimes.indiatimes.com/markets/real-estate/news/home-sales-could-rebound-in-2013-helped-by-quicker-approvals-and-lower-finance-cost/articleshow/18375590.cms