India housing market to cool: poll

Gurugram, India. Marcin Mierzejewski/Shutterstock

Despite government efforts to drive up consumption and defibrillate the economy, experts think the Indian property market will decelerate further this year, a Reuters poll uncovered.

National residential property prices in India are expected to grow just 1.3 percent this year, according to the survey of 20 property market experts between 13 February and 1 March.

This is down from the 2.0 percent growth forecast by respondents in the November poll, Reuters noted.

“House prices will only see moderate changes because of the uncertainty surrounding the general elections, present liquidity crisis and relatively slower sales,” said Anuj Puri, chairman at Anarock Property Consultants.

House prices in the national capital region of Delhi alone are likely to fall 2 percent this year. Forecasts for next year are slightly less dire with national home prices expected to grow by 2.5 percent.

A liquidity crisis, coupled with a slowing economy, is keeping buyers at bay, most respondents agreed. Bank lending has been subdued, clamping down the home buying market, as major financial institutions report a rise in non-performing loans.

“It is no secret that in the past, funds parked by political parties in real estate were sucked out of the system to finance their campaigns – and the market is currently facing a serious liquidity crunch,” Puri noted.

The government last month announced reductions in Goods and Services Tax (GST) rates levied on under-construction and affordable homes.