Market Recovery in Mid-2010: CRISIL

CRISILThe real estate sector in India is expected see an increase in demand in the latter half of 2010 as per the 10-city CRISIL Research report.

The economy since mid-2008 has been affected by job related uncertainties and liquidity crunch among developers. This has taken an obvious adverse effect on sales. Developers have resorted to discounts and the market has seen levels of corrections. Average residential capital values declined by 18-20 per cent in March 2009 from the lofty highs in the first half of 2008.

The impact was more prominent for houses priced over Rs 60 lakhs. This was augmented due to a rise in real estate prices between 2005 and 2008 with a failure of household income rising at an equivalent rate.

On the subject of affordable housing, it states that there is no official definition of affordable housing. It hence assumes “affordable housing” as that can be afforded by majority of households in the city (assuming 60% of households). The onus of the affordable housing, however, has been placed on the government which it states has access to cheap land within the city.

The revival in the market, specifically resurgence in demand, has adopted the “wait and watch” policy. The report stated that the withdrawal of investors affected cities like Kochi, Chandigarh and Pune considerably, whereas Pune, Bengaluru and Mumbai have witnessed the steepest corrections in capital values.

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