Residential Demand / Launches Dull - Price Stable

Residential absorption (area sold) in key cities of India fell 31%YoY/ 51%YoY in FY14/ 4QFY14 (Prop Equity data). The pace of demand destruction has accelerated through FY14 with 3%/ 27%/ 39% 51%YoY decline in absorption in 1Q/ 2Q/ 3Q/ 4QFY14. Absorption fell 19%QoQ in 4QFY14. Though the monthly numbers are volatile, April 2014 (1MFY15) saw an absorption decline of 53%YoY in key cities tracked. All these data point to sharp deterioration in residential demand due to ongoing economic slowdown and stubbornly high prices.

 Residential Property Prices in India have been increasing despite weak volumes over the past 3-4 years. However, now different data points are suggesting some decline in prices in a few areas. At least the sharp price rises have moderated over the past few months.