Realty prices may come down by 7-18%

Q: As per the market study buyers can expect chill out in the real estate prices.

Joydeep D,

22nd July 2015

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Mahesh Patkar,

28th July 2015

Comment

Hi all,
Apart from that there are several reason for slowdown of real estate market around the city. These are 1) Key state governments like West Bengal, Delhi and Maharashtra have hiked ready reckoner rates sharply this year and thus prevented prices from dropping to a market clearing level.

2) The 8% point gap between gross rental yield and bank base rate highlights the unattractiveness of real estate for investors.

3) Black Money Bill went live on July 1 and has made high-net-worth families unwilling to invest in real estate.

4) several years' worth of unsold real estate inventory in most of India's tier-1 and tier-2 cities is causing investors to hold back further purchases.

Shaunak Verdla, Mumbai

22nd July 2015

Comment

You are partly righ....... Abhyudaya,
According to me, result is not just a drop in demand for building materials and challenges for lenders with big mortgage, housing finance books, but also a generalised slowdown in GDP growth.

Hamsika Iyer, Pune

22nd July 2015

Comment

Some of the property registration offices in Mumbai suggest a fast drop in the registration of new residential properties and data from property valuers in Maharashtra and Tamil Nadu suggest that transaction volumes have fallen by 10-15%/ annum for 3 consecutive yrs now. Also, new launch volumes are down 40-80% on a pan-India level,

Shaunak Verdla, Mumbai

22nd July 2015

May be........but the reports indicated that some major parts of cities such as Delhi have already steep price correction at 20-25% and smaller cities such as Jaipur, Rajkot and Lucknow have seen a 15-20% correction on a yearly basis.

abhyudaya.s, Bangalore

22nd July 2015

And seeing the current market scenario and the pile-up of inventory in major ciites like Mumbai and Delhi, it would take as much as 11-14 quarters to clear the existing inventory.

Shaunak Verdla, Mumbai

22nd July 2015

Yes, Buyers can expect cooling down in the real estate prices not just in metros but also in tier I and II cities. Even though the RBI's Housing Price Index suggests that prices have limited on a pan-India basis.

Hamsika Iyer, Pune

22nd July 2015

Comment

I think you are quite right......Hamsika,
I found some data from property site which indicates a deeper slowdown in India's large cities, with prices falling by 7-18% y-o-y. The only reason of cooling down is the wake of banks tightening their policy and strings to developers. At the same time, government continue committed to its effort to reduce black money.

abhyudaya.s, Bangalore

22nd July 2015