Prices of residential units in the re-sale market have fallen by around 30 per cent in some locations as the true estate sector gets more realistic post-demonetisation in an already tepid environment.
The difference in price between primary and secondary residential property in Gurgaon is increasing, after the over-supply of properties and eagerness of investors to cash out, making re-sale properties a good option for home buyers.
“There is downward pressure on prices as the unsold inventory is huge. Moreover, there’s no outlook for growth right now. Those who are already sitting on properties in Gurgaon want to exit because if industry is depressed further, they may get an even lower rate,” Pankaj Kapoor, Managing Director at real estate consultancy.
Some markets just like the Delhi-NCR, Pune, Chennai and outskirts of Mumbai Metropolitan Region, have now been showing substantially discounted in the secondary market compared to the primary market.
In Dwarka Expressway and Sohna in the NCR, the prices in resale market are less than new supply by ranging from 20-30 per cent, pointed out Sanjay Sharma, Managing Director of Gurgaon-based real estate consultancy and brokerage firm QuBrex.
Investors in a project called Chintels Paradiso in Gurgaon can sell flats at ₹4,900 per sq ft even as the builder has not reduced the rate from ₹6,500 per sq ft. In Chennai’s Vijay Shanthi Pond project too, the asking rate varies from ₹2,600 per sq ft to ₹4,200 per sq ft depending on the seller’s urgency to exit. “Earlier, the second-hand market prices were pegged to the price of builders in gurgaon for exactly the same property. But today, the prices are independent of the principal market and derive from supply-demand and have hence fallen. The overall economic scenario was already bad and demonetisation has dealt a death blow.
The resale market is cracking. “The costs are down. While the amount of sellers is less, the desperation level is higher and they will probably compromise much more than before.
The world has changed post demonetisation. There aren’t a lot of transactions in the market. And the secondary market is seeing discounted compared to the primary market because developers have not reduced the rack rate much.” Sharma’s firm did only two transactions in the last 40 days, on the other hand to the 25-30 deals he did during better times.