Real estate sector has been very badly affected by liquidity tightening in the banking system, the rising interest rates and slowing down of economy. It has also been noticed that the demand for residential realty has come down. With regard to this, the prices across the markets in India have started showing a downward trend.
According to a CMD of National Housing Bank (NHB), he stated that rising interest rates have badly affected the demand from the end-users. Moreover, this has led to a rise in the inventory of unsold property. The fact is that the builders have complete the already started projects as well as meet the loan repayment liability. Hence, they find it more practical to cut prices to sell the units and create cash.
Amongst the 26 cities surveyed by the NHB, around 22 cities, during the April-June quarter saw a drop in property prices. This was as compared with the first quarter of the calendar year. It is believed that it would be the first time that in recent years the residential unit prices have fallen in many big cities. It is also considered as a sign of developers opting to cuts to shoot up demand in a slowing market.
According to the NHB Residex, as compared with the previous quarter, in April-June 2013 the biggest price fall was seen in Ludhiana, of 5.99 per cent which was followed by other cities. The CMD also stated that the downward trend in the realty market was good for both end-users as well as builders. Moreover, the investors are absent as the price of money has gone up and the chances of making money in the short-term are not very promising. However, it will be a positive development for end-users to buy house.
The CMD also stated that if prices came down, transactions would increase. This would improve the cash flow in the sector. When in 2008 and 2009, the whole country was twirling under the global financial crisis, real estate came out of it intact. It was primarily because of the fact that the strategy adopted to increase turnover and cut prices.
According to a CMD of National Housing Bank (NHB), he stated that rising interest rates have badly affected the demand from the end-users. Moreover, this has led to a rise in the inventory of unsold property. The fact is that the builders have complete the already started projects as well as meet the loan repayment liability. Hence, they find it more practical to cut prices to sell the units and create cash.
Amongst the 26 cities surveyed by the NHB, around 22 cities, during the April-June quarter saw a drop in property prices. This was as compared with the first quarter of the calendar year. It is believed that it would be the first time that in recent years the residential unit prices have fallen in many big cities. It is also considered as a sign of developers opting to cuts to shoot up demand in a slowing market.
According to the NHB Residex, as compared with the previous quarter, in April-June 2013 the biggest price fall was seen in Ludhiana, of 5.99 per cent which was followed by other cities. The CMD also stated that the downward trend in the realty market was good for both end-users as well as builders. Moreover, the investors are absent as the price of money has gone up and the chances of making money in the short-term are not very promising. However, it will be a positive development for end-users to buy house.
The CMD also stated that if prices came down, transactions would increase. This would improve the cash flow in the sector. When in 2008 and 2009, the whole country was twirling under the global financial crisis, real estate came out of it intact. It was primarily because of the fact that the strategy adopted to increase turnover and cut prices.
Real estate sector has been very badly affected by liquidity tightening in the banking system, the rising interest rates and slowing down ...
