Despite a slowdown in property sales, realty developers across the country are launching new residential apartments during the ongoing Navratri festival in the hope that they will get higher sales from prospective home buyers, who have deferred their buys so far.
Home sales across the country have fallen more than 40 per cent in the last nine months due to high interest rates and increase in monthly loan payouts by borrowers.
The Reserve Bank of India has raised the repo rate, the rate at which it lends to banks, by 125 basis points to tame the spiralling inflation and commercial banks have in turn raised their consumer loan rates by 50-100 basis points.
Thus, on an average, the monthly installment on a Rs 10-lakh loan for 20 years has risen over 50 per cent to Rs 12,740 on a 14.25 per cent interest rate from Rs 8,060 (7.5 per cent interest rate) five years ago.
This has led to a sharp drop in pre-sales for the property developers, their main source of project funding. Developers are also hit by falling stock markets, increase in lending rates, ban on external borrowings among others, which have limited their cash flows and execution capabilities.
“Developers are launching the projects during Navratri and Diwali in the hope that there will be takers for new new flats after the shraadh period is over. However, we think Diwali will not be very exciting this time around due to poor market conditions,” said Raminder Grover of Homebay Residential of property consultancy Jones Lang LaSalle Meghraj (JLLM).
The shraadh period precedes the Navratri festival in the country, and is considered to be inauspicious in the Hindu religious calendar, when property buyers do not book houses.
“Though speculators have vanished from the property market, end user demand is very much there. On September 2, we launched our Muradabad project and within four days, we sold off half the project,” said Neetal Narang, assistant general manager at Parsvnath Developers.
Apart from launching the new projects, developers are offering freebies such as stamp duty waiver and cash discounts to boost sales.
For instance, Sunil Mantri Realty has waived off stamp duty (5 per cent of property value) for the buyers at its Mantri Park project in Goregaon (East) in Mumbai and offering 5 per cent discounts in Bangalore and Gwalior Projects.
