To say that there is stress in the Pune property market due to slow sales and rising inventory would be stating the obvious.
With the prices virtually stagnant and the industry being plagued with an ever increasing inventory for sale the market is in a mode of a gradual downward drift. However, even though the city property market has been witness to stagnation, there is still hope in the last quarter of the fiscal year due to underlying factor that while the property prices in the city have increased only nominally, affordability has risen with rising salaries, lower interest rate and lower inflation.
In terms of the market statistics, there seems to be a slow recovery. As per the Gera Pune Realty Report, annual price rise in Pune has been a miniscule 0.7 per cent. Despite that there has been 11 per cent reduction in sales, compared to the last year.
While the gross stock has risen 27.17 per cent in the past 12 months, the inventory for sale (inventory with developers for sale) has shown a steep jump of 55.65 per cent in the same period. Though the statistics clearly shows a challenging scenario, the fact is that the market has expanded in terms of supply and at the same time, while sales numbers have dropped, they continue to happen.
Analysts are hence advising that those looking to purchase a home would be well advised to go out and strike a deal for their dream home now. Given that all indicators show reduced interest rates in the near future, a floating rate mortgage would be advisable at the present time. Pune today stands as a truly buyers’ market where some of the best deals are available. The last quarter of the fiscal year hence is seen as the right time to buy.
Rohit Gera, Managing Director, Gera Developments says, “While the report suggests that there is stress in the realty market, timing the market to perfection is not possible. The expectations of a sharp price correction do not seem to be materializing. Part of the reason why prices continue to be anchored down is the increase in the total supply of projects and the infusion of more number of homes in the market.
“The prices are in check because of the significant increase in supply and not because of low demand. The other factor being the demand and purchasing of homes are not keeping in tune with the growth in supply. The rise of gross inventory of 26.81 per cent is significant. The silver lining however is that sales numbers over the past 1.5 years have been extremely steady this indicates that a large number of home buyers believe that this is the right time to buy and invest in homes,” says Gera.
Kishor Pate, CMD, Amit Enterprises Housing agrees that home sales are still slow, but the momentum is definitely picking up. Fence-sitters are coming back into the market, but are evaluating their options thoroughly. Since there is a good amount of inventory on the market, this process takes longer than it usually would. However, these are not ‘window shoppers’ – they have made purchase decisions. In particular, there is considerable momentum in the budget homes category, especially in areas like Undri and Ambegaon.
“The market conditions are still ideal for striking very favourable deals. Most developers are willing to negotiate and many of the offers they had announced during the festive season still hold good. The pall of pessimism that had descended on the Pune realty market in 2015 is lifting, with both end users and investors showing definite signs of increasing interest. Investors are once again betting on Pune’s ability to deliver over the long term,” says Pate.
Anil Pharande, Chairman – Pharande Spaces maintains that the investment trend has been slow and steady, but the alignment has definitely changed. Demand for homes in Pune is to a large extend driven by inward migration, and the majority of good job opportunities are now emanating from the manufacturing and IT hubs in the PCMC. In today’s scenario, it is possible to detect the direction of demand for both jobs and homes from Internet activity.
“I expect the first quarter of 2016 to reflect the ongoing sluggishness, but thereafter the Pune real estate market will pick up. For investors, it is still a much stronger contender than neighbouring Mumbai. Homes are selling well in and around Pune’s major employment hubs, and investors are still very much focused on this trend. As long as the job market remains strong, there will always be demand for residential property in Pune,” says Pharande.
Despite of slow sales, rise in inventory and no price appreciation, Pune still stands as a market that is quite realistic. There has not been major investor activity for quite some time and by and large it is end user driven market. More importantly, most of the available inventories are in mid segment.
The fact that new jobs are being created in the city across the industries and inward migration of professionals happening, the indictors clearly suggest that it is slow yet sustainable market. Will the last quarter of the fiscal year be the turnaround time? Well, everyone has fingers crossed within the built environment of Pune real estate. But the probability is pretty high.