Despite the fact that developers have not registered healthy sales growth in third quarter of FY12, thanks to the ever increasing demand, there is a lack of total gloom in the real estate market—though it cannot be called euphoric. A nationwide survey conducted by Mint Money and property portal shows that less than half (about 43%) of those planning to buy an apartment think that prices will increase. About half (50.4%) respondent buyers think the same for plots.

Builders are more hopeful and more than half think that prices will rise. The Mint Money- survey was conducted primarily in 10 cities (Delhi, Mumbai, Chennai, Kolkata, Bangalore, Pune, Hyderabad, Ahmedabad, Jaipur and Nagpur) and incorporated responses of around 3,000 prospective buyers, 200 builders and 500 real estate brokers and consultants. While the survey was done across the age group of 18 to 54 years, the maximum respondents were between 25 and 45 years of age.
Developers to increase rates

Developers are still facing problems such as limited access to construction finance and high input costs due to continued interest rate hikes till second quarter in this financial year. In addition, they have huge debt on their books. Builders have also witnessed poor sales in the third quarter. At present, the biggest hurdles are high input cost and high debt. Says Pradeep Jain, chairman, Parsvnath Developers Ltd, “Because of cost pressures, developers have no choice but to increase the property rates in at least some of their prime projects in prime locations and key cities. The prices have already moved up 15-20% in the last 9-10 months.” The company is planning to further increase prices in some of its projects.

While developers are under pressure due to the above factors, they hope that the demand will keep pushing prices. According to recent estimates from the ministry of housing and urban poverty alleviation, there is a shortfall of 47.43 million and 26.53 million houses in rural and urban areas, respectively. The survey results indicate a rising price scenario in real estate. “Demand will push the prices upwards. Property market moves in phases of lows and highs. What we saw in the last part of 2011 was a low; what we will see in coming quarters will be the high of the market.

Despite the fact there is an inventory hold up with many developers the trend for price hikes is gradually setting in. Banks have already started to bring down their rates. In the next two to three quarters, there will be a visible change in pricing,” says Shridev Sharma, managing director, Kamrup Housing Projects Pvt. Ltd, a New Delhi-based real estate firms having projects in Delhi-National Capital Region and Guwahati.

The high demand for the affordable and mid-income housing is making people anticipate price rise in this segment as well. About half the respondents thought that the prices of affordable housing will rise, but just 41% thought that in the mid-income housing segment. Respondent builders and brokers too agree on this. Builders see both these segments rising. Among the brokers, almost 52.2% say that the mid-income will rise the most:bab (45): while only 32.7% think that affordable will see the second best increase:bab (45):
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