Mumbai: This year was a buyers’ market for real estate. “Real estate prices remained static, which didn’t work well for developers and investors," said Pankaj Kapoor, founder and managing director of Liases Foras, a realty research company. “It was a tough time for the sellers because they could not increase the prices on the back of high inventories and were also stuck with low liquidity."

However, sales this year had risen compared with last year owing to government incentives, he added. “To sum up, 2018 has been a mixed bag of highs and lows. Despite few visible signs of recovery across segments including residential, the liquidity crunch – further exacerbated by the non-banking finance companies (NBFC) crisis—put all industry stakeholders on tenterhooks," said Anuj Puri, chairman of Anarock Property Consultants.

The teething issues of policy overhauls like the Real Estate (Regulation and Development) Act, 2016 (RERA) and goods and services tax (GST) also faded away, leading to a relatively more transparent and efficient business environment, said Puri. While affordable housing took centre stage in the residential space, co-working emerged as the next bright spot in commercial spaces, followed by logistics and warehousing seeing significant growth, he added.

Prices remained flat

Real estate prices have remained flat for most of the year across the top metro cities. As per Anarock data, average prices have largely remained static across the top seven cities in 2018. While the price for most metro cities ranges from 4,500 to 5,500 per sq ft, the average price was 10,500 per sq ft in the Mumbai Metropolitan Region (MMR) throughout the four quarters of the current year, shows data.

The prices may have remained static or may have corrected in a few regions. “What we need to keep in mind is that the inflation that hit us is 7% but we are not hit by the consumer price index (CPI) which is at 4%. So a property which may have been priced 1 crore last year, may have stayed the same this year instead of being hiked to 1.7 crore. This indicates a discount," said Deepali Sen, founder, Srujan Financial Advisers LLP. According to Liases Foras data, housing sales in the top seven cities up to September 2018 has been 2.09 lakh units, which shows a quarterly increase of 1% and a yearly increase of 9%. As per Anarock data, the new launch supply across the top seven cities is estimated to be 1,93,600 units by the end of 2018.This would be an increase of 32% over the previous year.

Affordable housing accounted for the lion’s share of this supply with over 41% of the new supply coming into this category, according to Anarock. Unsold housing stock stood at 6.87 lakh units in Q3 2018. Considering that unsold housing stood at 7,44,000 units in Q3 2017, the decline is 8% over the previous year, according to Anarock. Ready-to-move-in properties garnered maximum buyer interest, with Anarock’s Consumer Survey indicating that 49% property seekers are intent on buying ready to move-in homes. “From the buyer point of view, since the housing inventory has increased and prices have either remained static or have corrected in a few markets, the availability of varying options of houses has got better," said Melvin Joseph, founder of Finvin Financial Planners.

What should you do?

If you are planning to invest in real estate, remember that it is an illiquid asset.

If you are buying property for investment, look at the rental yield after factoring in the cost of buying the property on loan, cost of stamp duty, broker fee and maintenance.

If the math shows that returns are not great, then even if the prices are falling or static, you should reconsider your plans. If you are buying property to live in, then consider factors such as affordability, commute and your lifestyle.