"Unlike the conventional narrative, developers cut down prices to offload their unsold inventory", Samantak Das, chief economist and national director at Knight Frank, wrote in the report published on Wednesday.
The past year has been packed with uncertainty and volatility for the real-estate sector as reforms nudged developers toward being more transparent. Moreover, the share of affordable homes in the new projects-those in the Rs 50 lakh bracket-have shot up from 53% in 2016 to 83% in 2017.
With trickling sales and sharp drop in launches, he said the unsold inventories in NCR have come down, still it would take more than four years to clear the unsold stocks. Approximately 37,653 units were sold in NCR previous year, a drop of 6% from 2016.
In a bid to boost demand, developers in Mumbai have even offered potential homebuyers freebies like 24-month rent assurance, stamp duty waiver, no floor rise charge and waiver of other charges, along with a discount in the base price.
"At the end of 2017, India's residential sector appears to have shrunk to a fraction of its size in less than a decade".
Bengaluru recorded negative growth in both launches and sales for the first time in H2 2017.
The good news is that the weighted average residential prices in the city contracted by 5% in 2017 y-o-y.
According to a report released by Knight Frank, political instability, recurring natural calamities and gloom in market sentiments stagnated signs of recovery noticed in the first half of the 2017 and Chennai residential real estate market recorded new lows in terms of new launches and sales of residential units during the second half of 2017. Across markets, level of unsold inventory dropped by 19 per cent to 5, 52,996 units.
The report also said that since West Bengal was yet to adopt RERA (Real Estate Regulatory Authority) and establish the Housing Industry Regulatory Authority (HIRA), the developers were adopting a wait and watch approach.
In case of office space, new completions increased 7 per cent in 2017 to 32.7 million sqft compared to 30.7 million sqft in 2016, but not at par with demand.
The report also suggested that the new launches of residential units had collectively come down by 78 percent at Mumbai, Delhi NCR, Chennai, Pune, Bengaluru, Kolkatta, Hyderabad and Ahmedabad. "However, as per further market assessment, an additional price benefit of 7.5% on base selling price (BSP) is being passed on to buyers in the form of GST input tax credit, which brings the total discount approximately to 12% of BSP", says the report.