BackMore people are searching for houses but the deals are still few
There is a surge in online house hunting but this rising interest in real estate is not translating into actual sale of houses, shows a Magicbricks study
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Irrespective of market dynamics, homebuyers who want to buy a house will continue to look for it. Giving fillip to this search for houses is the buzz that property prices have bottomed out, and that many aspiring homebuyers are looking for good deals.
In a report on the trends of online house hunting by consumers, the online realty portal Magicbricks.com finds that there has been a 61% rise in those looking for a house, over the past 1 year. It says that the number of active property seekers has gone up sharply on a year-on-year basis from about 340,000 in July 2016 to about 550,000 in September 2017.
However, the increased online house hunting is not translating into actual sales, and the real estate transactions on ground are still quite low. Let’s read on to know why house sales are low despite more people going out to enquire about them.
In the past few years, property prices have been either stagnant or have even corrected in some locations. This lull is not limited to one or two markets, it can be seen across the country. It would appear that most homebuyers are waiting for prices to come down and for the real estate regulations to be in place.
At the same time, those in the realty sector are saying that while prices have bottomed out, they suspect that many people are still postponing their home-buying decision expecting a further decrease in property rates.
There is another category of homebuyers that has managed to arrange the corpus or financing to own a house and is actively looking to buy a house. The supply-side stakeholders are optimistic about this group of buyers. “Usually, we see a surge in property searches during the festive season. But you need to understand that at present, the demand is more from end-users, who are usually slow in making decisions. So we expect the current increase in searches to result in an uptake in future transactions," said Ankur Dhawan, chief investment officer, PropTiger.com, a real estate portal.
However, the mismatch in demand and supply is also a reason behind the low sales volume in the current market. “Yes, there is a mismatch. Demand is more in affordable housing but there is a lack of supply in this segment," said Dhawan. For instance, most of the enquires that are coming from homebuyers in Bengaluru are for houses in the range of Rs40-50 lakh, but there is very little supply in this segment. Same is the case in Mumbai. However, in case of areas like Greater Noida West, there is supply in the this range but there is also a lot of negative sentiment, as insolvency proceedings have been launched against many developers in this area, apart from many other legal proceedings. Because of this, many homebuyers are reluctant to buy here, added Dhawan.
The result is, very few houses are being bought and sold, which is evident in the level of developers’ inventories—which are either stagnant across the country or have reduced only marginally over the year, despite negligible new launches.
Many experts believe that weak sentiment among homebuyers is the reason why property transactions are low. “The economy is going through a rough patch with lots of policy changes; real estate in particular witnessed a lot of changes in the recent past, be it implementation of Real Estate (Regulation and Development) Act, 2016 (RERA) or the Goods and Services Tax. So all these had an impact on homebuyers’ decisions," said Samantak Das, chief economist and national director-research, Knight Frank India. Besides that, “The information technology sector, which is a major driver of home sales, is going through a bad phase and hence sales are low," added Das.
Apart from that, most homebuyers are looking for RERA-registered properties but, except Maharashtra, in most states the RERA websites are not operational and do not show any information that buyers can use in decision-making. This too could be a reason why homebuyers are not taking their decisions now.
However, many do not belive that property prices are an issue in this market. “There is enough time correction and even now many developers are offering discounts," said Das.
So, if you are looking to buy a property to live in and have also arranged the finances for it, you can find a good bargain but go for RERA-registered properties, or those that are complete or are near completion.
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