Realty stocks lose some ground as property boom takes a breather

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Subscribe to enjoy similar stories. India's residential property market is showing signs of cooling off, with several emerging pain points that could signal a slowdown. Realty sales volumes in the top ten cities dropped 8% in the first five months of the current fiscal year (FY25) through August, compared to the same period last year, according to data from Propequity compiled by Antique Stock Broking.

While new project launches remained flat, unsold inventory continues to rise, raising concerns about the sector's momentum, the brokerage noted in a report on 23 September. Several factors are contributing to this slowdown. Delays in approvals, particularly due to election-related disruptions, have hampered the pace of new launches.

Additionally, uncertainty around changes to capital gains tax for property, announced in the Union Budget, may have weighed on sales in July. The result: a halt in the rally of realty stocks. The Nifty Realty Index, which hit an all-time high of 1,157.35 in June, has since slipped by roughly 4.5%.

Read this | The return of the NRI homebuyer A slower pace of project launches is expected to impact the pre-sales growth targets of real estate companies, which range from 15% to 35% year-on-year. The impact could be steeper for those who are sitting on relatively lower levels of ready inventory of housing units. According to IIFL Securities, the June quarter (Q1FY25) saw only 16% of overall FY25 guided launches.