Government’s slew of measures to uplift the market sentiment of Indian real estate market are seemingly falling flat. As per Real Estate Sentiment Index Q3 2019 report by industry bodies FICCI and NAREDCO, and property consultant Knight Frank, the Current Sentiment Index of real estate stakeholders in India has plummeted to the demonetization-days level.
The report mentions that the Current Sentiment Index of real estate stakeholders in India has plummeted to 42 in the July-September quarter from 47 and 62 in the preceding two quarters. The future sentiment predicted in the report for the coming six months is said to be pessimistic.
Noteworthy here is that a score of over 50 signifies ‘Optimism’ in sentiments, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score of below 50 shows ‘Pessimism’.
Poor demand side performance despite plethora of measures by the government is the main factor why real estate stakeholders’ sentiment has gone in the pessimistic zone. The fact that measures announced by the Finance Minister in this quarter to save real estate market is majorly focused on affordable housing segment. The major and vast part of housing sector is still untouched by any of the announced benefits.
That is majorly why the measures have failed to infuse confidence in the stakeholders. Moreover, the real challenge lies in demand side story as end users are still unwilling to make home purchases owing to lack of financial confidence in the market as well as in the overall economy. Until and unless demand is not revived by putting money in the hands of buyers and bringing back their confidence in the market as well as in the economy, situation is expected to remain similar.
Talking zone-wise, the north zone continues to remain in pessimistic zone for the second consecutive quarter in 2019, though marginally improving from the preceding quarter of Q2 2019, Real Estate Sentiment Index Q3 2019 report says. In fact, the sentiment has been rubbed off to west zone as well where the score has gone below 50 for the first time.
Shishir Baijal, Chairman and Managing Director of Knight Frank India said, “The real estate stakeholders’ sentiment has gone in the ‘pessimistic’ zone for the current quarter owing to poor demand side performance, despite plethora of measures by the government. However, it is more significant to note that, for the first time, the stakeholders are wary regards the future six months for the real estate sector and the overall economy, thus pushing the sentiment score in the red.”
Here is the complete Real Estate Sentiment Index Q3 2019 report.
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