Housing still in high demand
It is not just that property prices are in a flux in the NCR. But there is no unanimity about the current state of the market, even among experts. Ever since the start of this calendar year, experts have been speaking about a correction in prices. While several cases are cited in support of these predictions, for the buyers houses are going out of reach almost each successive day.
The big picture
Recently, Makaan.com came out with a report titled Property Trends (Delhi/NCR). From the end user point of view, it did not present a very rosy picture. Broadly, the report says that while there is a slowdown in the market, demand for houses has actually grown. And in the face of claims that there is a correction in prices, the property prices have actually registered modest to handsome appreciation, over the January-April 2008 trimester.
The findings of the report however have to be taken with pinch of salt as it is based on the activities of prospective buyers visiting this particular property portal. Of course this portal does not host all the properties in the country nor do all the property seekers go only to this portal. So while the sample of this study may be suspect, some of its trends may be pointing to trends on the grounds. Makaan.com could not be contact for clarifications on the methodology. However, the report may pointing in the right direction regarding prices as sellers put up their asking price on this website virtually on a daily basis.
The report confirms that south Delhi is one of the hottest real estate destinations in the NCR, in terms of price as well as demand. The only other area that outpaces in terms of buyer interest is Gurgaon. Yet, despite its popularity, interest in Gurgaon has declined. What could be the reason for this?
Healthy disagreement
Sunil Bedi, MD JMD Group says, “The slowdown in the income of IT professionals has adversely affected the rental value of apartments close to IT companies and IT Parks.” Taking a more moderate view, Deepak Aggarwal, COO, Era Landmarks says, “There have been certain cities which witnessed IT boom in last decade and consequently there has been surging demand from IT professionals. However given the present market, though there is slowdown in the employment rate, the actual demand from the IT professionals has not come down. Only the growth rate which we witnessed earlier has slowed down.”
Kushagr Ansal, director, Ansal Housing Construction takes the other extreme view. He says, “Slowdown is not due to slowdown in IT professionals’ salaries as market is also driven by NRIs and short-term investors. The slowdown is due to increase in the cost of home loans, and the investors trying to recover money that is already blocked.”
If ever you wanted to experience the Biblical Babel, try buying or selling a house in the NCR.
They also agree
According to the report, demand has also softened in Faridabad and Greater Noida. Noida however has continued to register an increase in demand. So, the slowdown, if it is taking place, is restricted to some markets only. The report points out that prices have significantly declined only in Bhopura, Ghaziabad, Sector 56, Gurgaon, and Sector 80-89 Faridabad. Elsewhere either the change is too minor (both increase and decrease of prices) or the prices have soared. The places where prices have boomed are: Sector 40-49, Faridabad, Dwarka, Vaishali, Indirapuram, Mayur Vihar, and DLF City Phase 5, Gurgaon.
Kushagr Ansal’s comment can throw some light on this movement. He says, “Investors are moving to Faridabad, Panipat, and Sonepat.” If this is true, prices here would be down for now. He adds, “End-users are moving to Gurgaon and Ghaziabad due to better infrastructure.” And this is one of those rare points on which the experts agree. Deepak Aggarwal says, “Though there has been much hype about the saturation in NCR market but still Faridabad, Gurgaon, Ghaziabad, and NOIDA are seeing good movements in property.” Movement of end-users is a sure shot sign that prices will rise.
Beneficial interpretations
Besides geographical trends, the report also gives an indication of various categories of houses. The trend here is encouraging and discouraging at the same time. The upside for buyers is that supply has exceeded demand in the Rs 75 lakh to Rs 2 crore segment. So, sellers would be under pressure to sell, which should impact prices in this category. The other trend is that demand has surges for houses below Rs 75 lakh. The most disappointing thing about this entire thing is that, nobody is talking about the Rs 20 lakh house. That category simply seems to have vanished, despite urgent and screaming demand. And again, the stakeholders say that this category is unlikely to be revived anytime soon. In the NCR, then, Rs 40-75 lakh is being touted as the affordable category. In fact, many stakeholders believe that money has nothing to do with affordability. Kumar Gera of CREDAI recently appealed to the Ministry of Housing and Urban Development that the affordable house tag be given to any house that is between 300 to 700 sq ft. By that token, YOO’s service apartments (in fact any service apartment in any metro) that cost upward of several crores of rupees, would all be categorised as affordable housing.
Even on the issue of demand tapering off in the Rs 75 lakh and above category, there is babel all around. Kushagr Ansal agrees that this is taking place in the NCR. Sunil Bedi says, “Demand has not exactly reduced. Such properties have a different segment of buyers who aspire for better features like security, power back-up, club, etc and are ready to pay more to avail such facilities.” To be honest Mr Bedi, we all expect security and power backup.
Greater Noida going nowhere
The most interesting story is that of Greater Noida. There is very little demand for the houses here. Sunil Bedi sums it up, “Low occupancy and poor law and order situation. Over supply is the other major reason. As there is low occupancy the return on investment is low, and investors have lost interest in Greater Noida.”
However, Kushagr Ansal says, “Properties within middle-income group’s reach, say Rs 20-25 lakh, are still selling. Only high-end properties showing slowdown.”
But how many of these Rs 20 lakh properties can actually be there in an already over-priced area like Greater Noida?
Who to believe
Of course, diversity of opinion is healthy and inevitable. The buyer however, needs to be aware that not everything that an expert tells him, is the fact of the market. The property market today is in a flux and unlike other markets there is virtually no transparency here. Very often, we don’t even know what trends to watch out for.
So, you don’t really have to look for answers in the reports that come out with property trends. These reports are perhaps more important for the questions they raise than the answers they try to provide.
The big picture
Recently, Makaan.com came out with a report titled Property Trends (Delhi/NCR). From the end user point of view, it did not present a very rosy picture. Broadly, the report says that while there is a slowdown in the market, demand for houses has actually grown. And in the face of claims that there is a correction in prices, the property prices have actually registered modest to handsome appreciation, over the January-April 2008 trimester.
The findings of the report however have to be taken with pinch of salt as it is based on the activities of prospective buyers visiting this particular property portal. Of course this portal does not host all the properties in the country nor do all the property seekers go only to this portal. So while the sample of this study may be suspect, some of its trends may be pointing to trends on the grounds. Makaan.com could not be contact for clarifications on the methodology. However, the report may pointing in the right direction regarding prices as sellers put up their asking price on this website virtually on a daily basis.
The report confirms that south Delhi is one of the hottest real estate destinations in the NCR, in terms of price as well as demand. The only other area that outpaces in terms of buyer interest is Gurgaon. Yet, despite its popularity, interest in Gurgaon has declined. What could be the reason for this?
Healthy disagreement
Sunil Bedi, MD JMD Group says, “The slowdown in the income of IT professionals has adversely affected the rental value of apartments close to IT companies and IT Parks.” Taking a more moderate view, Deepak Aggarwal, COO, Era Landmarks says, “There have been certain cities which witnessed IT boom in last decade and consequently there has been surging demand from IT professionals. However given the present market, though there is slowdown in the employment rate, the actual demand from the IT professionals has not come down. Only the growth rate which we witnessed earlier has slowed down.”
Kushagr Ansal, director, Ansal Housing Construction takes the other extreme view. He says, “Slowdown is not due to slowdown in IT professionals’ salaries as market is also driven by NRIs and short-term investors. The slowdown is due to increase in the cost of home loans, and the investors trying to recover money that is already blocked.”
If ever you wanted to experience the Biblical Babel, try buying or selling a house in the NCR.
They also agree
According to the report, demand has also softened in Faridabad and Greater Noida. Noida however has continued to register an increase in demand. So, the slowdown, if it is taking place, is restricted to some markets only. The report points out that prices have significantly declined only in Bhopura, Ghaziabad, Sector 56, Gurgaon, and Sector 80-89 Faridabad. Elsewhere either the change is too minor (both increase and decrease of prices) or the prices have soared. The places where prices have boomed are: Sector 40-49, Faridabad, Dwarka, Vaishali, Indirapuram, Mayur Vihar, and DLF City Phase 5, Gurgaon.
Kushagr Ansal’s comment can throw some light on this movement. He says, “Investors are moving to Faridabad, Panipat, and Sonepat.” If this is true, prices here would be down for now. He adds, “End-users are moving to Gurgaon and Ghaziabad due to better infrastructure.” And this is one of those rare points on which the experts agree. Deepak Aggarwal says, “Though there has been much hype about the saturation in NCR market but still Faridabad, Gurgaon, Ghaziabad, and NOIDA are seeing good movements in property.” Movement of end-users is a sure shot sign that prices will rise.
Beneficial interpretations
Besides geographical trends, the report also gives an indication of various categories of houses. The trend here is encouraging and discouraging at the same time. The upside for buyers is that supply has exceeded demand in the Rs 75 lakh to Rs 2 crore segment. So, sellers would be under pressure to sell, which should impact prices in this category. The other trend is that demand has surges for houses below Rs 75 lakh. The most disappointing thing about this entire thing is that, nobody is talking about the Rs 20 lakh house. That category simply seems to have vanished, despite urgent and screaming demand. And again, the stakeholders say that this category is unlikely to be revived anytime soon. In the NCR, then, Rs 40-75 lakh is being touted as the affordable category. In fact, many stakeholders believe that money has nothing to do with affordability. Kumar Gera of CREDAI recently appealed to the Ministry of Housing and Urban Development that the affordable house tag be given to any house that is between 300 to 700 sq ft. By that token, YOO’s service apartments (in fact any service apartment in any metro) that cost upward of several crores of rupees, would all be categorised as affordable housing.
Even on the issue of demand tapering off in the Rs 75 lakh and above category, there is babel all around. Kushagr Ansal agrees that this is taking place in the NCR. Sunil Bedi says, “Demand has not exactly reduced. Such properties have a different segment of buyers who aspire for better features like security, power back-up, club, etc and are ready to pay more to avail such facilities.” To be honest Mr Bedi, we all expect security and power backup.
Greater Noida going nowhere
The most interesting story is that of Greater Noida. There is very little demand for the houses here. Sunil Bedi sums it up, “Low occupancy and poor law and order situation. Over supply is the other major reason. As there is low occupancy the return on investment is low, and investors have lost interest in Greater Noida.”
However, Kushagr Ansal says, “Properties within middle-income group’s reach, say Rs 20-25 lakh, are still selling. Only high-end properties showing slowdown.”
But how many of these Rs 20 lakh properties can actually be there in an already over-priced area like Greater Noida?
Who to believe
Of course, diversity of opinion is healthy and inevitable. The buyer however, needs to be aware that not everything that an expert tells him, is the fact of the market. The property market today is in a flux and unlike other markets there is virtually no transparency here. Very often, we don’t even know what trends to watch out for.
So, you don’t really have to look for answers in the reports that come out with property trends. These reports are perhaps more important for the questions they raise than the answers they try to provide.