Demand in the real estate sector plunged in the second half of 2019 as housing sales fell around 22 per cent in July-December compared to the total sales first six months, a report by Anarock Property Consultants said on Wednesday.

It said that out of the total 2.61 lakh units sold during the year so far in seven major cities, around 1.47 lakh flats were sold in the January-June period, and the remaining 1.14 lakh had been so far sold in the second half.

This slump in sales comes despite the slew of measures announced by the government in the past few months to ease liquidity and boost demand.

However, as per the report, with improved sales during the first six months, overall sales rose marginally by 5 per cent.

Anuj Puri, Chairman of Anarock Property Consultants said in a statement: “The unrelenting liquidity crisis, lower-than-expected buyer sentiments and faltering GDP growth eventually put brakes on the overall housing growth in the second half of 2019.”

He said that, the Mumbai Metropolitan Region (MMR)and Pune were the “showstoppers” of residential real estate in 2019 as they recorded housing sales rise of 22 per cent and 18 per cent respectively.

Bengaluru witnessed a 12 per cent fall in sales during the year.

Both MMR and Pune collectively saw residential sales of nearly 1.22 lakh units as against 78,860 units in the southern cities of of Bengaluru, Chennai and Hyderabad and 46,920 units in the National Capital Region (NCR).

Sales in NCR sales increased by 6 per cent to 46,920 units in 2019 from 44,300 units in 2018.

On the supply front, the report said that a total of 2.37 lakh units were launched in 2019. The second half saw launches of over 97,000 units as against 1.4 lakh units in the first half, thus seeing a half-yearly decline of 30 per cent.

However, it noted that on an annual basis, there was a 21 per cent rise in new supply in 2019 over 2018.

Puri said that in terms of new launches too, MMR and Pune were on top in 2019 with annual increases of 30 per cent and 89 per cent, respectively. Among the seven cities, MMR saw maximum new launches during the year at 78,000 units while Pune was second at over 46,100 units.

The survey was carried out in NCR, MMR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata.

Meanwhile the IMF has cautioned that if inflationary pressure continues, there will be limited room for RBI to cut interest rates to support growth.

“On monetary policy, given the sharper-than-expected slowdown and negative output gap (growth below potential), there is room to cut the policy rate further, especially if the economic slowdown continues. However, should inflationary pressures increase (stemming from the recent increase in food inflation and one-off prospective price increases in the auto and telecom sectors or resulting from fiscal pressures), the RBI will have limited room for further cuts”, the Fund said in its 2019 India Article IV Staff Report.

Earlier this month, the six-member Monetary Policy Committee of RBI surprised markets by deciding to hold the repo rate steady at 5.15 per cent, citing high inflation. The MPC, headed by Governor Shaktikanta Das, preferred to wait and watch for the previous rate cuts to trickle through before easing further.

But before that it had already cut 135 bps in rates of interest. “While the current spike in the headline inflation is arguably due to the temporary supply shocks on the food front, the impact is not confined only to a few items. It is important to understand how much would be the impact and for how long,” MPC member Ravindra Dholakia said.

Annual retail inflation increased to 5.54 per cent last month. RBI inflation target is 4 per cent. Retail food prices, that make up nearly half of India’s inflation basket, rose 10.01 per cent in November from a year earlier, against 7.89 per cent in October.

“There exists considerable uncertainty on the food price trajectory, and the quantum of impact of unseasonal rains on kharif output would be known only early next year. The incoming data may also provide greater clarity on the growth outlook,” deputy governor B P Kanungo said.

In the July-September period, India’s growth continued to slide, to a six-year low of 4.5 per cent.

GST tax cuts along with specific incentives for export oriented industries, particularly in the manufacturing sector, and strategic trade pacts have been prescribed by economists to end the phase of Stagflation which is currently plaguing the economy.

Indo-Asian News Service