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Property prices up despite slumping demand

One of the latest real estate trends is that there is a high escalation of property prices and lower demand for property from people.

The RBI data this year states that there is a stoop in the housing loan, which ultimately has reduced the demand among people. The demand in metro areas has declined perceptibly in the last few months. The main reason behind this is the high interest rates which has apparently made the buyer hesitant to invest in any property. Apart from just the property buyer, the builder’s communities are also affected by the higher interest rates.

The property buyers have preferred staying in a rented home rather than going for a property investment. The soaring realty prices have kept them away from investing in any property. Other reasons for a slow sale of property are;

a)Inflation
b)Banks refusing to grant payment due to unfulfilled targets.
c)Below-par increment for the customers.

The rise of property prices and the fall of the customer demand:

All if the above factors are affecting the property market directly/ indirectly. Also the LIC Housing Finance has seen a decreased slip of the loan of about 17% from 28%. This has in turn compelled the company to set a lower target of about 20% to the current fiscal. The housing loan disbursement has also seen a radical decline this year as compared to last year.

At the beginning of this year it was expected that the property market would fetch greater returns which turned out the other way. There was a greater slack this year and it is quite a disappointing fact due to both the local and macro-level issues. Also it was stated that major cities like Bangalore, Mumbai and NCR have unabsorbed supply which can also come up to two years.

Various reasons like hesitating property buyers, dipped volumes and the debt-trapped developers are in flow. In spite of all these factors the land prices are still in the upright direction which is quite surprising. The developers still haven’t lowered the property prices.

Apparently, owning to all these factors, the buyer is waiting for the property prices to fall which results in a decreased property demand. The sales volume in the top 10 cities has decreased by about 10% in the last year. One of the most affected cities is Mumbai with a decline of 40% in transactions. Also other cities are witnessing fall back in transactions.

Taking an example of Mumbai, various renowned developers like the Kalpataru Group, Oberoi Realty, Lodha Developers, Wadhwa Group and Nirmal Lifestyle have raised their property prices in the past few months by about 10% in major areas of the city. However, in spite of the availability of a maximum inventory level, there is very less land which is available for immediate possession. This in turn is helping the developers with projects which are close to delivery and resale flat owners seek premium for their units.

Also most of the property buyers are going in for a lesser range of apartments in major cities like Bangalore.

Tags : Property Property Buying Property investment property rent Rent rent apartments rent homes

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