Insite Report Jul-Sep 2018

METHODOLOGY

The Insite Report by 99acres.com captures the quarterly capital trends and the annual rental analysis of residential apartments in key real estate markets – Delhi NCR, Mumbai Metropolitan Region (MMR), Bangalore, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad. In order to assess the prevailing sentiment, the report delves deep into demand and supply of properties across varied budget segments and occupancy stages. While demand is a function of queries received, supply is based on property listings posted on 99acres.com in Jul-Sep 2018.

NATIONAL OUTLOOK

HOME BUYING SENTIMENT

Buyer sentiment remained upbeat in all metros barring Kolkata where the ambiguous regulatory environment restricted sales. While Hyderabad witnessed increased property enquiries in the pre-election period, Delhi NCR, Mumbai and Bangalore merrily marched towards the festive quarter in hope of a realty revival with property sales improving this quarter.

PROPERTY PRICES

Except for Chennai and Pune where prices remained unchanged, average capital ‘asks’ remained buoyant across metros in Jul-Sep 2018. Capital values in the premium segment remained under check due to a cumulative inventory overhang of over four lakh units. Hyderabad led all metros with two percent growth in prices, QoQ, owing to the recently launched RERA website.

RENTAL LANDSCAPE

The seven-quarter growth spree of the rental market continued in the eighth quarter with all metros reporting a spike in the average rentals by 3-5 percent. Mumbai, Bangalore, Pune and Hyderabad emerged as the frontrunners in the rental market. With a slow-paced revival in the capital market, rental growth is anticipated to continue in the forthcoming quarters.

SUPPLY

Cities continued to swarm with unsold inventory, albeit lower than the previous quarters but sufficient to restrict capital growth. Hyderabad had the lowest unsold stock, whereas Delhi NCR and Mumbai led the pack with 1.5 lakh and 80,000 units lying unsold, respectively. The controlled pace of new launches and slow-paced RERA registrations curtailed the saleable primary inventory.

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IN FOCUS

GST ANNIVERSARY

June 1, 2018 marked the first anniversary of the replacement of the archaic tax policy with the unified tax system – Goods and Services Tax (GST) in India. The realty sector, which landed in the 12 percent tax bracket, was freed of multiple taxes such as VAT, Service Tax and Central Excise. Input Tax Credit (ITC) and the anti-profiteering clause were the two most benefitting features of the new tax system.

PROPERTY PRICES

Ambiguities regarding Input Tax Credit and its mode of payment kept the buyers wary of investing in under-construction properties. Despite causing a shift in buyer preference towards ready homes, GST did not trigger a downward price correction. Exclusion of Stamp Duty and Registration charges from GST increased the total cost of owning a house by 3-4 percent.

AFFORDABLE HOUSING

The slash in the GST slab from 12 to eight percent firmed buyer’s confidence and demand for the country’s flagship program – Pradhan Mantri Awaz Yojana (PMAY). Although a significant impact on property sales has not been noted, the rate cut has helped improve buyer sentiment. The move is expected to propel transactions in the affordable housing segment in the longer run.

RENTAL MARKET

The extension in the monthly limit of maintenance charges to Rs 7,000 for levying 18 percent GST, and on the annual threshold limit from Rs 10 lakh to Rs 20 lakh for the applicability of GST on rent attracted from a commercial property or from a residential property used for commercial purposes, eased the tax liability on property owners.

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