Tough macro finally appears to be taking a toll on demand for residential property, which has held up relatively well over the past 1-2 years. Residential property absorption in 11 key cities (Source: Propequity)
fell 10% YoY/ 20% QoQ in 1QFY14. The absorption had grown 7% in FY13. Commercial absorption in April-May 2013 fell 5% YoY (FY13 : -20% YoY)
Residential price rises continue due to high cost inflation and developers’ inability to cut prices. Residential prices are up 13% YoY / 1% QoQ in key cities. However, the All India House Price Index (Source: RBI), which is a more reliable but less comprehensive indicator, shows a 2.1% QoQ increase in residential prices in 4QFY13. This is the slowest pace of QoQ increase since 4QFY09 (except 3QFY11) and seems to be pointing to some cooling off in the pace of price rises at the margin. Commercial rentals remain flat YoY despite high inflation due to oversupply in most parts.
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