- Notes ban pushed realty market to complete standstill, says Knight Frank
- The property consultant says sales volume in top eight cities fell 44%
- Developers refrained from new launches, buyers were cautious, it adds
Sales volume in top eight cities in India, including normally resilient market Bengaluru, dropped by 44 per cent to 40,940 units - which is the lowest quarterly level since 2010 - in the fourth quarter of 2016 (October to December) compared to the corresponding period a year ago, the report said.
New launches by developers also took a hit during the quarter, falling by a massive 61 per cent, the report said.
The report is based on property market in eight top cities: Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad. (Also read: 70% businesses in Mumbai, Pune say note ban hit them hard)
"The demonetisation move on 8 November brought the market to a complete standstill. Against this backdrop, developers refrained from announcing any new launches and buyers turned extremely cautious before committing on purchases," the report said.
The plunge in home sales during the October-December quarter significantly impacted the overall sales in 2016. "2016 replaces 2015 as the worst performing year in terms of sales volume in the recent history", the report said.
Sales volume in the top eight cities has dropped 9 per cent in 2016 to 244,680 units from 267,960 units in 2015.
On the contrary, the residential market of the top eight cities started off on a positive note in 2016 with sales in the first six months of 2016 (January to June) witnessing a 7 per cent jump in sales volume compared to the same period of the previous year. (Also read: 'When property rates rose at fastest pace in 30 years')
The property market in fourth quarter in all the top cities were impacted due to demonetisation. "None of the big cities were spared from the fallout of demonetisation took All cities have witnessed a crash, including the usually resilient Bengaluru, during the fourth quarter of this year," the report said.
In Delhi NCR, sales volume dropped 53 per cent year-on-year to only 6,765 units while new launches fell by a massive 73 per cent to just 3,710 units during the same period. Prices in the NCR residential market have dropped by 7 per cent in 2016 compared to 2015, the report noted.
The Mumbai Metropolitan Region (MMR) saw launches plummet by 53 per cent and sales by 26 per cent, the report said.
Home sales in Bengaluru, which is seen as a resilient market, also fell 45 per cent in the October-December quarter as compared to the year-ago period.
The report also noted that the demonetisation move resulted in a massive notional revenue loss of more than Rs 22,000 crore to the real estate industry across the top eight cities. "In other words, if the government had not taken the demonetisation move, the residential segment would not have suffered a revenue loss of Rs 22,600 crore," it said.
Similarly, the notional loss to the various state governments on stamp duty collection was estimated in excess of Rs 1,200 crore.
The report noted that uncertainty is likely to continue in the next quarter. "It will be important to see how developers recalibrate their business to the changing environment, and whether buyers capitalise the opportunity of various reforms and change."
In comparison to residential market, the office space market in Mumbai, NCR, Bengaluru, Pune, Hyderabad, and Chennai remained steady in 2016 as compared to 2015 level, the report noted.sales