Monday, November 11, 2013

DOWNFALL OF PROPERTY IN INDIA

While all eyes have been on the rupee and the share markets, nobody has cared to look at real estate. While people were looking at the rupee or the share markets, it was real estate that was playing games with people. Prices of real estate in the Indian markets have started to drop big time, what with the unfavorable atmosphere and reducing holding capacity of developers. Real estate prices have started falling in cities like Delhi, Mumbai, Pune, Bengaluru and Chennai, as per a survey conducted by NHB. This survey was conducted on a sample size of 22 cities and figures of the April-June quarter were compared to the first quarter of the calendar year. This fall in prices has come on the back of a squeeze in liquidity and dearth of buyers to pick up the inventory that was piling up. It is the developers who have blinked first in the competition between the consumer and the builders. This is because the RBI has sought to increase the rate of interest for home loans and therefore, there is a drop in demand for houses. So, the builder community, especially the ones who did not have the holding capacity decided that they would start reducing their rates so that it brings some liquidity into their business. Although, all this is happening in the real estate sector, the NHB chairman and managing director feels that the real estate story is not yet over and there is still more to be seen both by builders and investors, who are engaged in keeping the prices of real estate prohibitively high preventing consumers to take decisions on buying property. Until now only those people who were traders in real estate were investing in property. The developer community was also helping their cause by announcing schemes like 20% down-payment and 80% after possession in monthly EMIs.


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