Real estate developers to cut property prices
The year 2012 was a tough year for both real estate developers and home buyers because of the high property prices.
The middle class and even the upper middle class found it impossible to invest in properties in India due to soaring property prices.
There was a fall in property prices in 10 to 19 cities in July-September quarter, according to data from the National Housing Bank.
It is said by chiefs of realty firms that builders have to lower property prices to attract home buyers mainly in metro cities like Mumbai, Delhi and the NCR.
It is doubtful that incentives and freebies will increase the sale of properties. The only way to have healthier sales is to offer financial relief to the home buyers. The real estate market will remain constant in Tier-II and Tier-III cities because of less property rates. Metro cities like Delhi, Bangalore, Pune and Mumbai have lot of investor activities rather than end user activities.
Property prices in India are extremely high in larger cities because builders have to pay heavy amount to develop a project. Construction cost has also gone up by 50 percent in recent times. The first quarter of the next year will continue to be challenging in retail sector, commercial sector and residential sector but the real estate developers have to double think on the pricing strategy in larger cities.
In 2012, the capital values in major metros have witnessed high escalation but cities like Kolkata and Hyderabad have seen stable prices. Price correction is needed due to lower demand. Residential launches were delayed in Hyderabad, Mumbai and NCR as there was delay in approvals and other uncertainties.
The government should look for a single window clearance system for speedy approvals which will impact on curtailing cost and ensure timely possessions. The rise in property prices in the recent years has been significantly higher than the increase in income levels. Real estate sector will face problem owing to the mismatch in this equation.
However, demand is high for properties in India, which are priced between Rs 30 lakhs to Rs 75 lakhs.
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