Housing sales have declined by 16 per cent to nearly 2.10 lakh units during 2012 in the top six cities as high property prices and costlier home loan affected demand, property consultant Knight Frank said in a report.
The new launches of homes, too, fell by 30 per cent with developers shying away from announcing fresh projects. Delhi- NCR, Mumbai, Pune, Bengaluru, Hyderabad and Chennai are the six cities tracked by the Knight Frank.
"A lacklustre residential market in 2012 was plagued by high property prices, relatively higher mortgage rates, weak business sentiments and a bleak employment scenario. This is reflected in the launches, which declined by 30 per cent in 2012 in comparison to a fall of 7 per cent in 2011," it said.
These six cities witnessed launch of 2,41,811 homes in 2012 as against 3,43,142 dwelling units in the previous year, an official said, adding that absorption declined to 2,09,787 units in 2012 from 2,49,127 homes in the previous year.
"Amidst faltering economic growth, residential sales momentum for the top-6 cities also took a beating; absorption in these cities has fallen by 14 per cent and 16 per cent during 2011 and 2012, respectively," the report said.
Developers have now become more rational in launching their projects, taking cue from the market, it observed.
"This can be clearly seen by closely studying the gap between the launch and the absorption numbers. This gap reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011, respectively," Knight Frank said.
The NCR led the residential market in terms of absorption as well as launches during the three year period of 2010-2012.
The two biggest residential markets i.e. NCR and Mumbai account for almost 60 per cent of total absorption, followed by Bengaluru (13 per cent), Pune (11 per cent), Chennai (9 per cent) and Hyderabad (7 per cent).
The consultant said the housing loans disbursed by banks have consistently grown in double digits since July-2010, but growth momentum has tapered off alarmingly since June 2012. "High residential real estate prices along with relatively high mortgage rates have led to this downfall."
Similar is the fate of the commercial real estate sector. Banks' credit exposure to developers has fallen from its peak growth rate of 23.21 per cent in June 2011 to 3.88 per cent as per the latest reported data on September 2012.