Over the past few days, real estate stocks have been witnessing a consistent drop, raising concerns among investors. On Wednesday, the Nifty Realty Index was trading lower, with stocks of major companies like Prestige Estates Projects, Sobha Limited, Phoenix Mills, DLF Limited, and Macrotech Developers taking a hit. The real estate market, which saw a boom post-pandemic, now seems to be entering a phase of slowdown.
Signs of a Property Market Slowdown
One of the primary reasons behind the dip in real estate stocks is the slowdown in India’s residential property market. According to industry reports, real estate sales in the top 10 cities have declined by 8% in the first five months of the current fiscal year. This trend is expected to continue, with housing sales predicted to fall by 18% across nine major cities in the July-September quarter.
The hardest-hit cities include Hyderabad, which is expected to see a massive 42% decline in housing sales, followed by Bengaluru with a 26% drop, Kolkata with 23%, and Pune with 19%. Other cities like Chennai, Mumbai, and Thane are also witnessing significant declines in sales.
What’s Causing the Slump in Realty?
Several factors are contributing to the current slowdown in the property market. Experts believe that developers are now focusing more on luxury projects, leaving a gap in the availability of affordable housing. Over the last two years, property prices have surged by 50-70%, making it difficult for the middle class and working professionals to afford homes, particularly in big cities.
For example, the cost of a 2 BHK flat in many major metros has reached crores, pricing out potential buyers. Furthermore, rising interest rates and inflation have made people more cautious about taking property loans, leading to reduced demand in the market.
Performance of Major Realty Stocks
Here’s how some key real estate stocks have been performing recently:
- Prestige Estates Projects: -2.25%
- Sobha Limited: +1.99%
- Phoenix Mills: -1.11%
- DLF Limited: -0.66%
- Macrotech Developers: -0.10%
- Mahindra Lifespace Developers: +2.99%
- Godrej Properties: +1.21%
- Brigade Enterprises: +0.44%
- Oberoi Realty: +0.20%
- Sunteck Realty: +0.15%
While some stocks have shown resilience, the overall trend indicates caution in the real estate sector. With a shrinking pool of buyers and increased focus on luxury housing, the market is likely to face further challenges in the coming months. Investors are keeping a close watch on how developers adapt to the changing dynamics and whether the sector can regain its momentum.
