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Price correction in Real Estate.

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Price correction in Real Estate.

Last updated: November 18 2009
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  • Price correction in Real Estate.

    Recession, while being the primary cause for ="http://www.indianrealtynews.com/category/property-prices/"]correction in property prices[/URL], is not necessarily the only reason. Scratch deeper, and you will find other factors responsible for correction in values such as increase in land supply/finished products, revision in specifications of buildings by developers, and increase in floor area ratio (FAR). A noteworthy point is while all new projects are being launched at realistic (corrected) prices, many of the existing projects have also corrected their pricing. In Gurgaon, various projects under DLF, Unitech, and Vatika, which were available in and around Sector Road and Sohna Road, near NH-8, in the range of Rs 4,000-8,000 per sq ft almost 7-8 months ago, are now available in the range of Rs 3,500 to Rs 4,500 per sq ft on basic selling price.” In Noida, the broker adds that projects on the expressway under Jaypee, Omaxe, Unitech, and Eldeco, were available in the range of Rs 5,000 to Rs 7,000 per sq ft, 7-8 months ago. But new projects of Jaypee, 3C, Unitech, Amrapali are available in the range of Rs 2,500 to Rs 3,500 per sq ft on basic selling price within the same vicinity.

    There has been a significant price correction and this is apparent in the average values prevailing in the NCR. While in upcoming projects at Gurgaon the basic selling price ranges between Rs 2,000 and Rs 3,200 per sq ft, depending on the location/sector, in Faridabad, it is between Rs 1,500 and Rs 3,000 per sq ft, while in Noida, the range is between Rs 2,500 and Rs 3,200 per sq ft. Developers attribute fall in realty values to something else. They feel price matrix is only determined by demand-supply equation. With global financial crisis and unabated rise in Indian inflation index, the cost of buying a house went up. Home loan interest rates also became much higher than the rates many could afford. To counter decreasing demand and to gain confidence of all stakeholders of Indian real estate, developers association like NAREDCO and CREDAI decided to bring down prices of various properties by reducing overheads and marketing costs. In some cases, ticket size of the property was reduced with reduction in size of apartment to make it more affordable for the masses.”
  • #2

    #2

    Re : Price correction in Real Estate.

    builders has reduced the size.

    in pune i havent seen prices dropped by such level
    Last edited September 29 2009, 08:00 AM.

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    • #3

      #3

      Re : Price correction in Real Estate.

      Hiii

      It is builder/broker lobby at work.

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      • #4

        #4

        Re : Price correction in Real Estate.

        prices will go down temporarily

        There will be 15% correction from the peek 2008 prices and not more than that, As still people are earning the same, no major correction in salaries, prices of essential commodities are still moving up, most of the state govt's are spending high on infrastructure projects like metro rails, that will continue for another 4-5 years atleast, govt is pumping money due to recession, banks may have little hesitation in giving loans but interest rates are still low as of now.

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        • #5

          #5

          Re : Price correction in Real Estate.

          prices gone up again

          Prices in Bangalore has gone up in Bangalore by 20-25% again by Oct- Nov 09 timeframe. The recently arranged home expo visits has led to create an artificial demand and builders are looting the same. JP Nagar 7 phase was 2200 psf has now gone to 2900. EC was 1600 gone to 2200psf, V raman Nagar and closeby was around 1800-2100 and now 2400-2900.

          These are all artificialyy created demand making people feel insecure taht flat prices will rise and will be out of hand in few days..
          Equity master is already saying real estate bubble is to burst very soon. If major companies burst small builders will also get afected.

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          • #6

            #6

            Re : Price correction in Real Estate.

            Factors leading to price fall (not crash)
            - Lack of end user demand and disillusionment of so called investors
            - Prices in New YOrk and other western cities are much more reasonable than Mumbai, Delhi so people wanting to invest there
            -Regulator coming (bill in winter session)
            -Large inventories of ready flats
            -Higher interest rates than the lows seen in 2008

            ...market will take care of itself and the builders staying power will come to an end

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