Is Trust Deficit Behind The Low Homes Sales In India?

Even with the many desperate measures called into action to revive the realty sector by way of making property purchases more lucrative for India’s common man, home sales declined 11 per cent annually during the quarter ending June this year, data available with PropTiger.com show. The commitment that cash-starved developers have shown towards project delivery by postponing new launches has also yielded only limited results. While new launches fell 47 per cent during this quarter, inventory stock declined by only 12 per cent year-on-year. One also wonders why sales numbers didn’t improve despite property prices seeing quite limited appreciation in the past half a decade, in India’s major cities.

On its part, the government has made reformatory moves such as the Real Estate Regulation Act (RERA) and Goods and Services Tax (GST) to make buying easier and affordable for buyers. These laws are also expected to generate better confidence among homebuyers, a feat that they are far from achieving so far, state experts. India’s banking regulator too has brought interest rates to a record low in the past one year.

“If buyers don’t budge and refuse to invest in the market despite the best of efforts made by all parties concerned, it has a lot to do with the trust deficit. They are still apprehensive about the state of affairs and the ongoing crisis pertaining to several big builders in the national capital region (NCR) is only making matters worse,” points out Brajesh Mishra, a Gurugram-based lawyer specialising in property disputes. “Barring a few states which include Maharashtra and Haryana, real estate authorities have not been able to offer the expected help. Consequently, a homebuyer has yet to reach a level where he feels confident to make a move,” adds Mishra.

The negative image the sector has gained is only making matters worse. “Even if a property broker approaches me with a reasonable offer, I find it hard to trust them. Trusting has backfired in cases where buyers spent all their hard-earned money on realty projects and are now being forced to go to court hearings to get their money back? Cases like Amrapali, Jaypee and Unitech act as a red flag,” says Priti Singh, a 35-year-old content marketing professional, who lives on rent in Noida and has been considering buying a home there for the past several years. “Noida has many ready-to-move-in options. I might opt for one of those when I am actually able to convince myself to take a final call,” Singh adds.

While the negative publicity is creating awareness among homebuyers and acting as a cause of concern for developers, this could prove to be a panacea in the long run. “An aware buyer would keep developers on their guard. They would be forced to leave their old practice of over-promising and under-delivering. In the era of aware homebuyers, delinquent developers have no place to thrive,” concludes Mishra.