Residential real estate now a buyer’s market

The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter.

Written by Santhosh Kumar | Published:June 11, 2016 2:25 am
real estate, india real estate, urban real estate, real estate market india, india real estate market, real estate news, market news, business news The most convincing signs of revival should be visible in the last quarter of 2016 or by the first quarter of 2017.

For the last 3-4 years, residential real estate market has seen sluggish demand, which has caused the unsold inventory levels to go up in some of the key Indian geographies. Supply/demand mismatch in terms of price and configurations has been the main reason for the rise in inventory levels.

From developers’ point of view, this has eventually resulted in:

* Correction of prices in many markets to improve sales velocity of unsold products
* Increased project launches with the right configurations to cater to existing demand

Interestingly, 2016 had started on a sunny note. The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter. There was a six-fold increase in launches of the affordable housing projects, as developers predicted greater demand in this highly price-sensitive segment.

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One way or the other, factors have now transpired to make residential real estate a buyer’s market that gives buyers the upper hand. They have a lot of options to choose from, with the added benefit of flexible rates and attractive payment plans.

Gains of a buyer’s market

Real estate prices usually drop as inventory increases — but even if they don’t, negotiation power goes up. Some realtors refuse to understand the realities of a slow market and will not accept any offers less than what they feel they should get. If a buyer feels that he is not getting the best possible deal, he should be confident enough to walk away and look at the next option on the list. Remember that in a buyers’ market, it is the buyer who has the power. It pays to be aware of about one’s bargaining power. If the home has been in the market for several weeks or months, has perhaps already undergone some price reductions and is still unsold, it strongly suggests that the seller is hoping to sell it as soon as possible. In such a situation, it makes sense to ask the seller for add-ons such additional furniture or fixtures, apart from a heavy discount on the listed price.

Avoiding confusion

Another inevitable result of heavy housing inventory on the market is that prospective buyers are confused about which options to focus on. This ‘problem of plenty’ can be resolved by looking only at select projects by reputed developers — it is surprising how quickly the range can narrow down if one eliminates anonymous smaller players from the field of vision.

Guidelines for buyers

* In the case of under-construction projects, buyers should only consider those which are likely to be completed in next 12-18 months.

*  Again, going with developers who have a healthy track record of delivery will mitigate the risks related to timely delivery.

* It is also essential to undertake good diligence in terms of the project’s market response and inventory sold, which will ensure that project is delivered

* One should look only at established housing corridors where social and physical infrastructure are in place

The writer is CEO – Operations & International Director, JLL India

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  1. A
    aps
    Nov 17, 2016 at 8:52 am
    mumbai real estate prizes to be dropped 50% .New buyer should wait and watch
    Reply
  2. A
    ashok s
    Jun 11, 2016 at 3:24 am
    Even if you say prices are cheap, but quality of construction is detroiting day by day for example ostwal builders ,in Mira rd ,quality is very poor
    Reply
  3. R
    realtyshield
    Aug 25, 2016 at 10:44 am
    Theme of blog is excellent there is almost everything to read, Brilliant post thanks for sharing for us
    Reply
  4. V
    vaman p
    Jun 11, 2016 at 6:46 am
    In Mumbai, builders have kept the prices out of reach of common man. As per this article, this is a buyer's market. Dear Author, home prices have increased by four times since 2008. Even in this sluggish market, they have not come down - where is the sluggishness. May be they might reduce the price by 200 - 300 Rs per sqft. But they were increasing the prices every month by 300-400 Rs per sq.ft. Besides, they have also tampered the approval plans by 70-80% loading in the area, as against 20%. An area shown as 500 sq.ft. (super built up) earlier, is now shown as 750 sq.ft. Is there any regulatory authority to check the malpractices of these looters? Everything is done under the protection of govt. because all the builders are either MLAs / MPs / Councillors or their friend. Today mumbai's real estate is controlled by the mafia of Corrupt politicians-Gangsters-Babus. Let us hope that new Real Estate Regulator Bill is ped soon and common mumbaikar can buy a decent shelter for himself from his hard earned money. Dear Modiji, pl. do something about these Robbers!!!
    Reply