The real estate market takes a southward dip in the monsoons making this statement an absolute myth. A study of trends over the past few years prove this. The market slows down and even after the monsoons, it takes a couple of months to stabilize again. The rains delay deliveries, dampening customer sentiments. Builders and developers find it grueling to keep up pace of work and finish projects in time. Rains deter people from stepping out to search for new houses or property. Forming a vicious cycle, the waning buyers and funds coupled with limited liquidity, restrict developers affecting new launches. The monsoon also witnesses the period of Pitra-Paksh, a time that Indians consider inauspicious for buying new property. All these factors combine to pull down real estate sales.
This fact is further limned by the Mumbai numbers, which clearly paint a dull scenario in the monsoon quarter. Number of sales in this quarter is usually lower than sales during the rest of the year. The market saw an exception in 2012, when the monsoon quarter witnessed a sale of 7,600 units as compared to the average of 6,900 units in the other three. In other years, including 2011, 2013 and 2014, unit sales during monsoon quarter was 15% less than other quarters. In 2015, sales dropped from 7,000 units to 6,000 units during monsoon. Even in areas like Andheri and Lower Parel, only enquiries take place and no real transactions.
People often wait for the monsoons to get over before finalizing their plans to shift homes. The floods, water logging and hapless drainage systems in our cities do nothing to improve the situation, only making it worse for the markets.
Due to low demand and high-unsold inventories at a time when developers need inflowing capital, real estate market shifts towards being a buyer’s market. The rates of property and houses plummet and dealers are eager and more than ready to negotiate prices with prospective buyers. If you are looking to buy a house, this is the time to invest and get good deals on real estate projects. Post monsoons, recovery is rapid and prices increase as demand picks up. The buoyancy becomes visible in the uptick in unit sales as soon as monsoon clears away. It witnesses a greater traction of buyers and prices of inventories often go beyond the buyer’s budget once again.
With an ongoing wait for the final verdict in 2016, it is hard to comment on the real estate scenario during this monsoon season. After a long, steep fall in real estate sales, economists and financial experts predict a rise in the real estate market. Just like other sectors, the real estate market also hinges its hopes on an above average monsoon. Affordable housing categories in the peripheries of some major markets are showing a positive rebound. Developers are looking forward to a continuing low inflation trajectory, better transmission of cutting rates by banks and a pickup in the economy.
Economists firmly believe the market is cyclical and the current scenario is just a phase. The real estate market is expected to pick up by the next 6 to 12 months. Furthermore, even though the markets show a short term sluggishness, the incentives offered by the Government in the Union budget, for both developers and buyers, is expected thrust up the affordable housing supply and subsequently, demand by this monsoon.