How Gurgaon Circle Rate Cut Affected Real Estate Sales In July  

Subsequent quarterly reports by PropTiger DataLabs revealed that the much-loved property market of Gurgaon had been losing its charm among home buyers and investors lately, thanks to the high prices in a slow market. Sales dipped, and new launches also took a severe hit. Developers who had heavily invested in the Millennium City came under a huge stress, as their exposure to Gurgaon was much higher than other parts of the national capital region (NCR). To address the issue, the Haryana government recently announced several measures, such as steps to improve city infrastructure and reduce circle rates in Gurgaon. 

The government's decision in June this year to reduce circle rates by 15 per cent across segments is widely expected to turn things around for apartments for sale in Gurgaon, and indeed the city's real estate market in general, in the medium to long term. 

In the short term, however, the move seems to have made little impact on the Gurgaon property market. According to PropTiger DataLabs figures, as many as 1,966 housing units had been sold in Gurgaon in July last year. Amid a general weakness in the real estate market, this number declined to 1,074 units in May this year, and further to 777 units in June (a month-on-month fall of 28 per cent). With a reduction in circle rates being announced in June, the rate of decline in sales was contained to an extent in July, at 686 units (a month-on-month decline of only 12 per cent). However, the fact that home sales in Gurgaon continue to be in the red indicates that home buyers might be waiting for a further correction in prices.

It must be noted that circle rates are only an indicative price below which property cannot be sold in a particular locality. Home buyers usually pay for property according to the market rate, while a reduction in circles rates brings down the cost of paperwork. Even so, trimming of circle rates might bring down prices in the long run. Authorities in Gurgaon, meanwhile, would need to do more to rebuild confidence in the city's real estate and bring buyers back to the market.