30% Dip in Property Prices: Realty Market Gloomy
Despite the upcoming election verdict on May 16, not all asset classes have been bullish in anticipation. The stocks may have been up for the past few months, but the secondary market isn’t responding similarly.
Prices of tens of thousands of homes in metros have crashed by as much as 20-30% this last year. This price crash is being driven by homeowners desperate to sell their houses and buyers hesitant to buy homes.
The brokers, too, find themselves influenced by this drastic fall in prices. They’ve been sitting idle for a whole month, waiting for buyers to come in so they can make a sale.
Anshuman Magazine, managing director of property consultant CBRE South Asia, acknowledges this situation, saying the matters are getting worse in the residential market and that the piling inventory of unsold homes is creating added pressure on the investors’ holding capacity.
Stocks had been rising because people were confident that Modi-led BJP could form a stable government at the center. But this hasn’t led potential buyers to buy homes.
Growth and policy are important factors in this mix, too. People’s incomes haven’t grown at the same pace as property prices, and so people are still waiting for a stable government to come along and make informed policy choices.
Another reason for potential buyers shying away from buying homes is that several real estate deals and projects have been lying in court, say analysts.
Now that the leading political parties are promising affordable homes for people, the situation might improve. But this will put investors, who look to buy property and sell them at higher prices, in a bind.
While buyers still wait for a further drop in prices.
Source: The Economic Times
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