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Delhi and Mumbai, two of the biggest residential property markets in the country, have shown divergent trends in price appreciation in the past two years. While Delhi recorded the least price rise at 4.4 per cent, Mumbai showed highest appreciation at 25.27 per cent between June 2012 and May 2014.
The prices in Pune grew 21.9 per cent, in Bangalore 19.47 per cent, Kolkata 17 per cent, Hyderabad 16.8 per cent and Chennai 13.2 per cent during the same period, according to data by real estate firm research firm PropEquity.
In the same period, the inventory levels have been rising. Mumbai Metropolitan Region has an inventory of 53 months at the end of June this year, while the National Capital Region has an inventory of 45 months, the data by research firm Liases Foras shows.
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"Buyers were in a wait-and-watch mode. The demand is there, but people have been delaying their purchasing decisions due to various factors which lead to such a huge inventory pile up," said Harinder Singh, managing director, Realistic Realtors.
Due to developers' focus on clearing the existing backlog, the number of new launches has also come down drastically in the range of 47-92 per cent across all seven major cities at the end of May this year, compared to June 2012, according to PropEquity data.
Experts say the slowdown has impacted the investor's market of Delhi-NCR the most. Many non-resident Indians had stopped buying and there was hardly any activity in the past couple of years, leading to such minimal appreciation in prices. The realty market is seeing declining sales coupled with higher inventory for the past two years. Moreover, developers are hard-pressed on funds with not many lenders willing to lend money to the ailing sector.
Earlier, the political uncertainty had impacted buyers' and investors' confidence. It was expected that the demand would return in the sector once sentiments improved. However, now it seems it will require much more than sentiment for a full revival in the sector. With a new government in place, experts are expecting the realty sector to bounce back soon.
The markets have already started showing signs of an improvement. "The activity and interest level have gone up since the formation of a new government. We are seeing increased property inspection visits as well increased footfalls in developer's offices of potential buyers/sellers. Overall, the number of queries has increased by almost 1.5 times compared to the past six months," said Ashutosh Limaye, head (research and real estate intelligence service) at Jones Lang LaSalle India.
