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Real estate prices likely to fall
Published on Wed, Aug 16, 2006 at 18:40 in Money » Tax section
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Mumbai: Have rising home loan rates hit your plans to buy a house? Well here is some good news. CNN-IBN reports that builders are already offering discounts and freebies to woo customers back.
Real estate prices seem all set to fall, especially in smaller towns, as builders are faced with falling demand. With rising interest rates, developers say that prices have already stabilised in most overheated pockets, and sales and enquiries are down nearly 30-50 per cent from their June levels.
Some builders are even estimating a drop of 80 per cent in smaller towns and in the outskirts of metros.
High interest rates are already taking its toll on realty prices in smaller towns as demand has fallen by over 50 per cent.
Colliers International chairman Akshay Kumar says, ”Developers are definitely in a bind, because we are seeing a sales slowdown. At retail customer end, customers are holding back because interest rates have shot up on home loans and even prices have shot up and they are holding back so they can see how they can deal with the situation."
To lure consumers back, builders in metros and smaller cities are offering a host of freebies to buyers. Some like Nirmal builders are ready to pay stamp duty charges, others are willing to dish out furniture and consumer durables, and some are even willing to negotiate on prices quite actively.
Runwal Group director Subodh Runwal says, “We are seeing lesser-known developers offering some schemes and it has more to do with the liquidity crunch in the market, so we are seeing smaller developers in outskirts of metros giving such schemes.”
Big developers in metros are still not facing major problems as they are sitting on a good amount of cash from selling property at extremely high prices just a year ago.
But builders warn that if buyers do not return this Diwali, then the real estate market may be headed for some serious trouble.
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