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With property prices remaining subdued, investors are not rushing to buy property as an investment option, and to add to that a meagre jump in the expected salaries discouraged them to do so.
Bengaluru, which had shown a positive sentiment all along, is now in neutral territory with the Housing Sentiment Index (HSI) at 100, and it has dropped 30 per cent from May 2014, according to a report by IIMB Magicbricks.
The aggregate Housing Sentiment Index (IIMB Magicbricks HSI), specially conducted immediately after the Union Budget 2015 announce- ment is at 84 this quarter, which is a steep drop of 31 per cent compared to the euphoria witnessed immediately after the elections in May 2014. (An HSI score of 100 suggests the prices would remain static). The IIMB Magicbricks buyer sentiment survey includes Ahmedabad, Bengaluru, Chennai, Delhi, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.
“Budget 2015 did not address the expectations of the consumers and this is reflected in the consumer sentiment. Consumers are still in the wait and watch mode and are likely to take a decision once more clarity is visible on both market trends and monetary policy front,” said Sudhir Pai, CEO, Magicbricks.
Summarising the findings, Uma Sitaraman, Lead Researcher, IIMB-Century Real Estate Research Initiative (CRERI), stated, “Sentiments have been steadily falling the past few quarters primarily due to homes becoming unaffordable across major cities. Further drop in sentiment across eight of the 10 cities after the union budget indicates that this sector has been largely ignored.
The Union Budget has not addressed affordable housing at all. There was also no major announcement to bring cheer to the home buyer, she said.
“There is a visible supply demand mismatch and unless this is addressed, the housing markets are going to remain subdued. Interest rate cuts alone are not enough tos attract buyers to the market at this stage,” she said.
As per the survey, 48 per cent home buyers are waiting for the prices to come down, reflecting the unaffordable levels to which property prices have soared in the last few years, especially in Tier I cities.
NCR witnessed a 38 per cent drop in sentiment since May 2014. Interestingly, inspite of the high unsold inventory, developers are unwilling to slash prices.
Poor/stalled infrastructure, lawsuits against builders and increase in circle rates have resulted in subdued sentiments in this region across the last three quarters, the report said.
