Residential real estate to witness price correction soon
Real estate firms have forecasted that in near future, a correction in housing market can be witnessed. This can be due to drop in property sales in past 12 months.
In December, rates of properties for sale in Mumbai was bit less while price growth in other Indian cities slowed.
According to property research firm, Liases Foras, prices of properties in Mumbai have dropped by 1%. Also, property consultancy CBRE has commented that prices of new properties in Mumbai went down by 2-5%. Both said that the rate at which prices were growing in the other cities, too, had come down significantly.
As per experts, pressure is building up for developers and very soon a correction can be witnessed if the market remains the same. Also, a 16% quarter-on-quarter drop in home sales was seen across top cities of the country. This is a sign that inventory build-up across the country due to economic slowdown could worsen.
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Cities
Drop in Home Sales
Bangalore
14%
Chennai
32%
Hyderabad
25%
National Capital Region
10%
Many developers are now forced to cut the prices of properties seeing the bad situation as per Confederation of Real Estate Developers Associations of India (Credai).
While some of the new project launches were made at lower prices, other cities have started facing pricing pressure due to more launch of new projects. According to Jones Lang LaSalle, prices in most of the other cities have remained stagnant while there was change in pricing in some parts of Mumbai.
The top six real estate markets in the country witnessed around 100 million sq ft of housing space being launched in the December quarter. It was one of the highest in the history of project launches after the recession of 2008-09 and about 28% more than that in the previous quarter.
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