Home sales in key cities set to go up in H2: Report

With buyer sentiment changing since the new government assumed office three months ago, home sales in the six key cities are expected to clip at 26 per cent in the second half of the year over the previous year, says a survey.
"The election results, sops for the housing sector in the Budget and all the subsequent decisions taken by the new government to revive economic growth seem to have changed home buyers' sentiment from negative to positive," Knight Frank Chairman and Managing Director Shirish Baijal said here today.
The sales in the six major cities -- Mumbai, Delhi-NCR, Banagalore, Hyderabad, Pune and Chennai -- are expected to see a healthy 26 per cent growth in H2 at 1,52,764 units over the same period last year.

"A slowing economy, rising interest rates, high inflation and the weak rupee, among others, created negative sentiment among home buyers. However, the new government's drive to revive growth seems to have struck the right chord with investors and we do notice substantial change in sentiment for the better," he said.
New launches, which saw a slow down in the past few quarters, are expected to grow 5 per cent at 1,69,602 units in the second half compared to same period last year.
Knight Frank chief economist Samantak Das said, "High unsold inventory and the poor response received by new projects launched in H2 of 2013 and the first half of this year are expected to deter developers from launching any fresh projects in most of the cities in H2. However, we will see some pick-up in transactions though it will take some time."

Mumbai and Bangalore are expected to lead the recovery in sales volume, while Delhi-NCR and Chennai are expected to witness a strong growth in new launches as these markets had observed sharpest fall during H2 last year, resulting in a low base.

In case of office space market, absorption is expected to grow 22 per cent in H2.
"Nearly 18.7 million sqft office space is expected to be absorbed in H2, which would be a 22 per cent growth y-o-y. We expect around 20.9 million sqft to be added during the period, up 9 per cent. Since sentiment is changing, we expect it to fall to 19 per cent in the vacancy rates on an y-o-y basis," he said.

"Office market of top six cities was recovering steadily over the past two years gradually. We expect the trend to continue over the next six months," he added.
The IT and ITeS sector continues to lead absorption across cities, except Mumbai because of limited supply.