2011 was a dismal year for the realty industry. Prices touched exorbitant levels, while sales figures of apartments plumbed the depths. So what was the reason for the slump? While builders blamed the government and banks for paralysing construction activity, housing activists and home-buyers blamed the builders for being too greedy.
“It was a disastrous year for the real estate industry. The state literally paralysed our industry and there was hardly any activity,” rued Anand Gupta, secretary, Builders Association of India.
In addition, the Reserve Bank of India tightened lending norms and hiked interest rates on home loans, causing many home-buyers to put off their buying plans. The year saw an unprecedented hike in real estate rates; hardly any apartments were available in Mumbai for less than Rs. 1 crore.
“The way the prices have increased, it makes more sense to take a place on rent than buy one,” said Mitesh Gala, who runs a coaching class in Dadar. Model Poonam Pandey too said she had put off her plans to buy a flat for now, and was waiting for the prices to drop.
Sales figures for apartments dipped sharply. According to Liasas Foras, a real estate research firm, the number of registrations dropped to 27,000 houses in 2011, from 45,000 in 2010, and 60,000 in 2009.
Activist Shreedhar Sharma, president of Revathy Foundation, also blamed builders for the mess. “It is their greed which is depriving genuine buyers of homes. Who can afford such high prices?” he said.
Builders dismissed these charges. “We are unnecessarily being made villains. There have been hardly any approvals in the past year. Besides, the Reserve Bank has tightened lending norms,” said Paras Gundecha, president of the Maharashtra Chamber of Housing Industry. “Rates are not reducing currently because there is hardly any stock in the market.”