Want to buy a home, but can’t afford it? Wait a year and organise finances, say experts, as property rates in metros are unlikely to escalate from here, and may well see correction before 2013-end.
“There is a fundamental problem with real estate. Affordability has been wiped out completely,” said Pankaj Kapoor, managing director, Liases Foras, a real estate rating and research firm. “But real estate developers are in troubles, so there is little scope for a price rise from here on for at least a year.”
Industry trackers say that in most areas of the Mumbai Metropolitan Region and the National Capital Region, investors were active buyers till last year.
Now, however, investors too are not buying properties as there is a visible downward pressure on prices. “Investors who already own properties are unable to exit. They are not actual users but mere traders. It is the consumer who will give you the final exit, but currently consumption is not happening,” said Kapoor.
According to a research report, there are 2 million potential buyers who would enter the residential real estate segment but for the irrational prices.
Recently, State Bank of India (SBI) cut the home loan rates by 0.25 basis points. Real estate developers were quick to conclude that the demand would go up as a consequence, but buyers are not entering because any amount of rate reduction cannot off set the prevailing high prices in realty.
“The prices have increased quite steeply in past some years,” said Anshul Jain, CEO, DTZ India. “We do not see any rise from here on till next 18-months. Demand might come after that provided the economy grows.”
Small apartments, which have seen the maximum demand in recent times, also saw the maximum price surge.
Last year many developers attempted to give their projects a luxury branding in an attempt to charge higher prices. In Mumbai, for instance, two-bedroom apartments within the city limits don’t come under R1 crore in up-coming projects. In the NCR, too, two- and three-bedroom apartments have seen maximum price rise in the last four years say analysts.