Property prices remain unchanged despite slowdown

October 9, 2008	(1 votes, average: 1 out of 5)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

The Indian real estate sector has been witnessing a slowdown but the developers are still holding on to the property prices. “Until a few months ago the slump was only being talked about and very few builders actually reduced their prices. The real impact will be seen now. The rupee fell to a six year low on Wednesday. The way the stock markets have reacted recently has created negative sentiments in the real estate market which will take at least two years to stabilize,” said Sandeep Sadh, CEO of the portal Mumbai Property Exchange. Sadh, like most property analysts, predicts continuing poor sales this Diwali, which is usually the time when maximum property transactions are conducted.

As the tug of war between unremitting developers and buyers waiting for a price crash continues, transaction volumes have hit an all-time low. In the month of August this year there have been only 3,814 property sales transactions, 30% lower than August last year which saw 5,385 transactions. “During Diwali, developers will be forced to reduce their prices by 20-25% if they want volumes in sales,” said Gulam Zia, national director, research and advisory services, at the property consultancy Knight Frank. Zia added that the reason developers do not want to admit to any such plans is because once home-buyers hear of a downslide in prices, they will wait for a further reduction which is what is happening right now.

Amongst the few developers who have decided to slash their rates are Orbit Corporations which has announced a 15% discount for bookings done in Diwali in any of their projects in central Mumbai. A week ago, Wadhwa developers brought down the rates for their under-construction project of two-to-four BHK apartments, duplexes and triplexes at Goregaon by Rs 1,500 per sq ft. “We brought down the rates last Friday, and post the price correction we sold 50 flats. Developers should realize that they cannot be rigid when the times are tough. If they do not bend when the storm is strong, they will break eventually,” said Vijay Wadhwa, chief promoter of the Wadhwa group.

The Maharashtra Chamber of Housing Industry (MCHI), however, still insists the industry has no plans to consider any reduction in rates. “With land and construction cost being high, we have left prices to the individual developers’ discretion. The pace of sales is poor at the moment due to the economic growth being slow but things will eventually improve,” said MCHI vice president Sunil Mantri who himself is currently offering stamp duty waivers for bookings in his projects.

News Published Under:   Property Prices |

Comments