News & Views on Indian Real Estate

Tuesday, October 07, 2008

NCR Witnesses A Fall In Projects

During January-June 2008, new housing project launches in the national capital region (NCR) slumped by 20%. This is explained by the slowdown in demand due to increase in real estate prices and rising interest rates for borrowers. The first six months of this year also saw a shift in developers'strategy towards mid-income houses, as the high-end segment witnessed resistance from buyers. Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37%. According to a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high-end houses are selling at a slower pace than the mid income segment. "Affordability is the single biggest factor that influences a home buyer's decision," says DTZ director (consulting and research) Mr. Abhilash Lal, adding that a series of interest rate hikes has almost doubled the equated monthly installment (EMI) outflow for a home buyer in the past few years. He added, "Buyers are increasingly shifting to mid-income homes as they can't afford a higher EMI." Lately, several developers, including India's largest real estate firm DLF, Ansals, Parsvnath, Omaxe, BPTP, Raheja and Gaursons have been actively building mid-income homes.

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