Property sales fall by 36% y-o-y; eighth consecutive month of volume decline

BANGALORE: The weak trend in property volumes continued with Mar 2012 property volumes declining 36% y-o-y, the eighth consecutive month of volume decline.

"Average pricing across most cities also appears to be moderating on changing volume mix indicating the lack of demand for high-income properties," mentioned brokerage firm Jefferies in its latest report on trend in the Indian property market.

Absorption volumes continued to fall across top seven cities in the country with Mumbai Metropolitan region seeing the steepest fall of 57% followed by Kolkata at 42% and Hyderabad at 415 each. Other markets like Bangalore and Chennai saw sales drop by 185 and 28% respectively.

"Absorption volumes' continuous decline confirms our belief of a weak market. We believe the weakness will continue throughout CY12 unless property prices correct meaningfully from the current levels," says Jefferies.

However, pace of increase in average pricing have moderated month on month but continues to increase y-o-y. Average pricing declined m-o-m across MMR (+1% YoY, -3% MoM), Gurgaon (+19% YoY, -5% MoM), Kolkata (+1% YoY, -4% MoM) and Hyderabad (-1% YoY, -1% MoM) more on account of lower demand for high-income properties rather than an actual decline in property prices, mentioned the brokerage.

This has reflected in the BSE Realty index, whcih is down 10% over the past month, 24% in the last three months and has given up bulk of its 2012 gains.