Pune is steadily evolving as a real estate market and with RERA, demonetization and GST transforming the realty arena in the country, property prices have also gone down by 4% in Pune while new launches have also come down by close to 19% in June, 2017. Average prices of residential property continued going down overall, bringing the reduction in property prices to 4.01% in June, 2017 on a year-on-year basis.
These figures were released by the Gera Pune Residential Realty Report covering the period between January and June, 2017. This study covered almost 3, 700 projects located across the PMRDA (Pune Metropolitan Development Authority) Region over the last couple of years. The report states that the downward trend in property prices can be attributed to the fact that most new launches took place in small size segments which have lower prices. The current average price in the region stands at around Rs.4,786 per sq. ft.
Most of this decline in prices has been observed over the last 6 months and this can be attributed to RERA and demonetization alike. The average residential property prices went down to Rs.4,786 per sq. ft. from Rs.4,900 per sq. ft. in December, 2016. This indicates a drop in prices by 2.33% and cumulatively brings the property price reduction to 4.01% from June 2016 to June 2017.
The reduction in prices is most visible in case of new launches. New phases of existing realty projects were introduced at average prices of Rs.4,510 per sq. ft. for H1-2017 in comparison to Rs.4,774 per sq. ft. in H2-2015 which represents a 5.5% drop as per the report. Affordability has increased immensely in Pune. The average salary increase was 6% and the same homebuyer can afford almost 30% more than what was possible in H2-2013. There is also greater demand for ready-to-move properties since RERA does not apply in this category.
This shows that average prices are coming down overall and also the influx of new realty inventory at lower prices, thereby bringing average prices down instead of a correction for existing projects according to Rohit Gera, the Managing Director at Gera Developments. Affordability has also gone up according to him. Gera added that ready home inventory is very low at present with only 8, 849 ready to move units available for sale while the last 12 months witnessed sales of 86, 354 units overall.
Gera also added that in case demand shifts to ready homes, the demand will surpass supply and this will lead to a rise in prices. Since most real estate developers will face GST costs and cannot afford to bear the same, this may be passed on as a rise in prices for customers according to him.
New property launches
The number of new launches in Pune has gone down by 19.7% over the last 12 months. 81, 922 new homes were launched between July, 2016 and June, 2017 which is lower than 1, 02, 036 homes launched between July, 2015 and June, 2016. The last 6 months have witnessed a reduction of 26% in new property launches. The period between July and December 2016 witnessed 47, 119 new units being launched and this came down to 34, 803 new units for the period between January and June, 2017.
The luxury housing/premium plus category witnessed a drop of 40% in new unit launches over the last 6 months in comparison to the earlier period. There was also a drop of 37% in launches of new units in the premium segment. Gera expects new launches to dip even further between July and December 2017.
As per the report, the off take for H1-2017 has reduced by 16.01% in comparison to H1-2016. Sales momentum is being witnessed in the value and budget housing categories at present. The sales drop remains consistent across all unit sizes. Total sales have gone down while market share has increased for the sub-600 sq. ft. housing segment with 1/4th of total sales coming from this category. The sub-800 sq. ft. category also accounted for half of total off take in Pune.
New launches have come down but average size of unsold housing inventory has also reduced steadily to 94 million sq. ft. in June, 2017 from 105 million sq. ft. in June, 2014. The gross value of inventory available for sale now stands at Rs.49, 214 crore in June, 2017 as compared to Rs.53, 181 crore as on December, 2016. This indicates a reduction of 7.46%.