Longest slowdown in history: Realty market stagnant in Chandigarh
Market review: Barring smaller sized plots, the UT residential realty market is struggling with low demandUpdated: Feb 17, 2018 15:57 IST
One of the longest slowdown in Chandigarh realty market history, spread over more than six years, has extended into 2018. The impact of slowdown on the homebuyer, though, has changed over last few months. While earlier, the homebuyer, particularly, the end-user was gaining from the slowdown in terms of the price corrections of residential property and properties becoming cheaper, now, he is faced with stagnant prices. The relatively low transaction notwithstanding, the limited housing supply in the city has finally put a stop to sharp price corrections witnessed in the city till around one year back, say local real estate experts.
Looking up, but not very high
Relative price stability achieved in the last four-five months in the city has been achieved on the basis of limited housing supply and the end-user returning to the market after the shock of demonetization of last year. “The end-user is back in the market. He is exploring and making purchases on the basis of his need. The realty investor is still missing from the market. The prospects of low returns and stingy transaction volumes are keeping the investor away from the city’s housing market,” says Sanjiv Sharma, 54, a Chandigarh based real estate consultant.
Most of the buyer activity is in the relatively smaller sized properties. “The end-user demand is mainly for the properties that range from 5 Marla to 10 Marla (125 sq yard to 250 sq yard). There are buyers and sellers of these properties in the market. For other bigger sized properties, while the seller offerings are there, the buyer interest is very limited. There are also few buyer queries for the properties bigger than 250 sq yard,” says Sanjay Arora, 43, a local real estate consultant.
The buyer activity is mostly limited to the plotted developments, and in the resale market. The city doesn’t have a primary market. For new properties buyers have to move to the periphery.
Location of a property is the determining factor whether there is demand for a property or not. “It is difficult to attract a buyer for a property in ordinary locations. The demand improves for property with good location, like near a park, or for a corner plot, etc. Though market conditions have changed in the last six months, yet, the buyer can still be choosy,” says Arora. The housing options and variety for the buyer is increasing in the Chandigarh tricity periphery. The city buyer can now expect relatively similar infrastructure quality in the periphery projects. Earlier, most of these projects were under-construction but now because of various reasons like the coming of real estate regulatory authorities, these projects are nearing completion. This also lowers the demand in the city.
The average price level, say local realty experts, are hovering at the level registered last year even though minor fluctuations are there depending on the size of the property. “Prices in the smaller sized segment have marginally improved by 5% to 10% in the last four months. Demand from the end-user and limited supply has pushed up the price level in these size segments,” says Sharma. In the bigger sized plotted segment and the apartment segment, because of low transaction numbers prices are stagnant. “When there is marginal improvement in prices with a property selling at a higher price than the prevalent market prices, then, after a lull in demand, there is again price correction. This price-demand process is currently the norm in the city’s realty market, and so, prices even in the smaller sized categories are practically stable,” says Arora.
Local factors and the over-all realty market conditions are the factors restricting the market revival in the city’s realty sector. “The higher level of the collector rates, which are in fact, sometimes even higher than the market rates, is a factor dissuading the buyer from entering the market. Another, several restrictions on the apartments and group housing projects should be eased so as to allow increasing transactions, easier availability and increasing affordability of properties in the city. This will immensely help the buyer and the market itself,” says, Sharma.
First Published: Feb 17, 2018 15:57 IST