Rising Popularity Of Resale Flats

New home sales may be few and far between, but resale of properties is booming. Sale of such properties is up 40% across the country in the last 6-8 months as buyers become more risk averse, looking at the enormous construction delays, say property brokers and financial institutions. According to Punjab National Bank and Indiabulls Housing Finance, 35-40% of home loans being taken today are for resale properties, which include both apartments that are ready to move in and those that are in the late stages of completion. Primary sales have slowed down and prices have stagnated or dropped. Resale of properties, however, has been strong in the last few quarters.

Time over-runs in real estate projects have become a sore point with buyers. According to property research firm PropEquity, nearly half of the 900,000 under-construction residential units are likely to be delayed by up to 18 months. Slowing of the economy to a 5% GDP growth level too has put doubts in the minds of home buyers. Property sales across the country have dipped in the last year and a half because of rising property prices.

According to PropEquity, in the first quarter of the current fiscal, 13,797 residential units was sold in Bangalore compared with 9, 742 units absorbed in the first quarter of FY13. Other bigger markets such as the Mumbai Metropolitan Region absorbed 15,501 units, down 21%; National Capital region (NCR) absorbed 26, 798, up 31% and Chennai saw 5953 units absorbed down 21% in January to March 2103 compared to same period last year.

Local brokers in Noida, Gurgaon, Mumbai and Bangalore say there are a number of speculators and investors in the market today who have picked up under construction properties in the last two years. These people are desperate to get an exit and so there are a lot of distress sales out making it a good time for homebuyers to clinch deals. When the market is good, a buyer would have had to pay a premium for ready-to-move in homes, or homes in projects that are in their late stages but today, he could land a discount.

The resale segment today is dominated by end-users, a majority of whom want to play it very safe, especially as they are bothered about construction delays. Most people wanting to buy a house are looking for homes that they can move in to within the next 6-8 months and are wary of projects where they do not see construction reaching an advanced stage.