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Resilience Expected In Residential Property Prices In 2016 Fitch


According to a report titled “Outlook 2016: Indian Home Builders” published by Fitch Rating Inc. the prices for real estate will be resilient in 2016. The primary reason as revealed in the report behind the resilience is the interesting offer provided by the home builders to the buyers; that of providing easy payment options instead of lowering prices. This modified solution is attracting home buyers which will keep the real estate market resilient for the year 2016.

Making Choice Easy for Buyers

The resilience in price is good news for the real estate market as well as for the buyers. With easy payment options, mostly installments and reduced interest rates will woo buyers to buy homes in the developing areas. Home builders have been reluctant to reduce the prices of the properties, but they have figured out different schemes to make purchase easy for buyers. This has lead to the resilience resulting in no big changes in the price of properties. National Housing Bank of India is corroborating the fact through the display of price index.

Real Estate will Gain Sales Momentum

The change in economic scenario, reduction in interest rates along with the strategy of product configuration modification will work in favor of building sales momentum in the market for the year 2016. The sales momentum is expected to increase during the second half of the financial year. This is good news because the real estate sector has witnessed continuous increase in debt levels and unused inventory over the past 3 years.

The pre-sales scenario for home builders is expected to improve by 5-10% over 2016 while on the other hand de-leveraging may be slow. Due to the easy installment plans introduced to the buyers, cash payments will be delayed. This is true for all the major home builders in the country. All these easy payment schemes had been launched during the last 12-18 months and hence the cash payments have been delayed throughout.

Fitch also mentioned in the report that inventory turnover is also anticipated to improve by the year 2016 as builders are concentrating more on selling the completed properties instead of building more. This will ensure the use of existing inventory. The pre-sales report for March 2015 financial year has increased by 18% and tracking the 7 big real estate giants Fitch reported the average selling price to increase by 13% during the same period. Of course, the focus has shifted to higher-end units.

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