Amid a surge in home loan interest rates, costly land transactions, and an elevated supply, Ahmedabad has seen an estimated 15 per cent decline in home sales this festive season as compared to last year, real estate experts in the city have observed. "The demand from home buyers usually peaks during Navratri. This year, the demand is muted in both the affordable and luxury segments. The demand for houses costing between Rs 50-80 lakh and luxurious homes costing around Rs 5 crore and above has dropped by 15-20 per cent, compared to the last year. However, there is an increase in sales for homes in the Rs 1-2.5 crore segment as the supply is less in this segment," Yash Brahmbhatt, founder of Shilp Group builders, told The Indian Express. According to Brahmbhatt, a higher number of new project launches and an increase of 10-15 per cent in prices led to the shrinking demand in the Rs 50-80 lakh home segment. "In order to control the prices of the affordable housing segment, the state government needs to further increase the FSI (Floor Space Index)," added the developer. A high percentage of new residential launches this year was witnessed in the northern part of the city, including in Gota, New Ranip, Tragad Chandkheda, and Motera localities. Jigar Mota, head of transactions in Ahmedabad for global consultants Cushman and Wakefield (C&W), has a similar view. "The demand is low for compact 3 BHK (Bedroom-Hall-Kitchen) homes. The primary reason for this is an increase in home loan rates which currently stand at 8-8.5 per cent compared to the 6-6.5 per cent during the pandemic period. Secondly, the land transactions have become expensive for the developer and the same is being passed on to the consumers. In the last year, the prices of homes in the affordable segment went up by 10-15 per cent," he said. To arrest the dipping sales, a number of real estate developers and promoters offered relaxed payment schedules for home buyers. "Developers, who were earlier building projects with 100-150 units are now constructing projects having 400-600 units. So the timeline for completion of these projects has increased from 2-2.5 years to 3-4 years. The developers are offering 1.5 years of extended time to home buyers to make payments," Mota added. Even before the festive season began, residential sales were down in the first six months of 2023. A report from another real estate consultant, Knight Frank, shows that sales in the residential segment were down by 3 per cent compared to a year ago. "Home loan rates touching pre-pandemic levels" was seen as one of the reasons for the subdued demand. The rising cost of construction and the subsequent price rise — of about 5-10 per cent — has also deterred home buyers this year. "While the demand has been stable, supply levels remain elevated even if marginally so. A total of 10,556 residential units were launched in Ahmedabad, approximately two per cent higher, year-on-year. The state government’s encouragement of the development of skyscrapers by increasing FSI limits has also resulted in a spate of such projects being launched, especially along the SG Highway. These products are priced higher than the average residential project due to the greater cost of construction, and in equal measure due to the highly elevated prices at which the land parcels have been acquired. This is a differentiated premium/luxury product offering compared to what the market has been used to," stated the Knight Frank report (January-June 2023) in October.
