 "Housing prices to go up in second half of 2014: Knight Frank")
Over the last two years, the launch of new projects as well as the sales has been hit by the slowdown. "But, this will improve in the next six months," according to a study by FICCI-Knight Frank Real Estate Sentiment Index for April-June this year.
"Housing prices are expected to go up during the second half of 2014 with an average increase of 5-8%, but it might go up by as much as 15% in certain micromarkets," Knight Frank India Chief Economist and Director Research Samantak Das said.
The index is based on a survey of various stakeholders including developers, private equity, banking and non-banking financial firms, surged by 6 points to 69 points, the highest since survey began three quarters ago. The current sentiment index by Knight Frank indicates the respondent's assessment of the present scenario compared to six months ago.
This is the only index released by a private consultancy firm, apart from government's National Housing Bank (NHB). However, the Residex by NHB which comes out for every quarter since July 2007, is based on home loans availed by buyers from various banks and financial institutions.
Knight Frank comes out with the sentiment index from the supply side, while NHB one captures the demand side. Many in the industry rely mainly on NHB data as it captures the buyer's activities across major cities, according to an expert tracking the sector.
Knight Frank India Chairman & Managing Director Shishir Baijal said, "The fact that political stability has a perceptible effect on the real estate sector is quite apparent from the optimism showcased by stakeholders post the elections."
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The market is significantly optimistic about the residential sector, with 62% of the respondents saying that housing prices will rise in the next 6 months against 14% in the previous survey. More than 80% of the respondents feel that residential project launches and sales volume will improve in the coming six months.
"With the backdrop of a stable government coupled with high expectations of faster decision making and positive reforms, the respondents have shown positive outlook pertaining to the residential sector in terms of sales and launches. In fact prices are also perceived to go up in the coming six months," Das said.
Future sentiment scores have risen across all regions with north being the most upbeat. "75% of the respondents anticipate the availability of funds to be better in the next six months," the survey said.
On the office segment, more than 75% of the survey respondents believed that leasing volume would witness and upsurge by the end of Q4 2014. "However, they expect new office supply to remain under check, which is likely to have an impact on rental appreciation. Majority of respondents feel that office space rental growth will strengthen in the coming six months".