Housing sales drop 33% in Chennai in 2013

New Delhi: New housing sales in Chennai has dropped 33 per cent to 18,200 units in 2013 due to slowdown in the realty market cause by macro-economic conditions coupled with high interest rates, according to a report by property consultant Knight Frank.

Though the sales volume was poor and below expectations, housing prices in the southern metropolis gave gone up by 5-7 per cent last year as developers restricted supply by offering fewer homes in the market.

Launch of new homes fell by 35 per cent to 20,100 units in 2013 compared to the previous year, when it was 30,900 units, the report by Knight Frank said.

"The year 2013 has not been very kind to the Chennai market and like all the other major cities in the country even Chennai has suffered the onslaught of the current slowdown in the real estate sector," said the report.

Chennai witnessed drop in sales volume to the tune of 33 per cent during 2013 making it as one of the worst performing years for the residential sector in the history of the city, it added.

It noted that since January 2013 absorption levels have been gradually declining with each passing quarter reporting a lower level than the previous quarter.

"Sales volume has dipped from 27,000 units in 2012 to 18,200 units in 2013 resulting in a fall of 33 per cent. The latest quarter, that is October–December 2013, has been one of the worst quarters in terms of sales and has recorded its lowest volume since 2008-09," the Knight Frank report said.

Factors such as slowing economic growth, rising interest rates by banks, high inflation and the weak rupee among others have contributed towards building a negative sentiment among home buyers, it said.

They have delayed their purchasing decision and are waiting for some sort of positive signal on these fronts. 

"Poor sentiment among home buyers has resulted in a decelerating trend in terms of sales over last four quarters.

However, developers in Chennai have been smart enough to take cognizance of such a trend and have cautiously reduced the number of new launches in the preceding 12 months," it said.