Resale homes will bring down prices
Earlier this week, it was reported that according to the National Housing Bank’s (NHB) residential housing index, property prices had shown a declining trend across the markets of about 22 cities.
Rising interest rates have adversely affected the demand from end-users. Many investors are exiting at discounts, from the sales deal, for want of funds. The fear of a further correction is one of the other reasons why reluctance is shown by them. The situation has led to the increase in the number of unsold properties in markets across many cities. In addition to it, many more projects are in the pipeline, which once launched, would add to the over-supply of apartments in these cities. Builders who have already started their projects, are forced to offer discounts so that the apartments are sold off at a faster pace,and they can take care of the loan repayment liability.
The current scenario is proving to be highly favorable for investors in search of liquidity as the secondary re-sale market is opening up a large number of opportunities to them. A profitable exit is provided to the end-user, who had invested on a property, at a much lower price point. Over-leveraged investors who bought residential apartments at lower rates few years back, are today provided with an opportunity to sell them off at higher rates, even after giving discounts as high as about 30%.
Pankaj Kapoor, Managing Director of Liases Foras, informed that the widening demand-supply gap will help prices fall further.
National Housing Bank Report (Apr-June 2013)
According to the National Housing Bank’s report, published last week, it was reported that 22 out of 26 cities were witnessed a fall in the sale price of apartments during the second quarter of 2013, when compared with the previous quarter.
Ludhiana, Chennai, Delhi, Mumbai, Pune, Bangalore, Hyderabad and Kolkata were some of the major cities that saw the fall of property prices over the quarter. The highest fall in prices, about 6% was reported in Ludhiana, followed by cities like Kolkata(5.6%) , Delhi(3.4%), Bengaluru(2.5 %), Mumbai(2.2%) and Chennai(1.1%).
