Nitin Sharma, 32, a mid-level executive with an automobile company, is not a happy man these days. Sharma, who was planning to buy a bigger house in Mumbai's Goregaon area, got a shock when the real estate developer informed him that he will no more get a 9% discount on the selected apartment as promised earlier.
"I have not paid any amount to the developer yet, but I was planning to do the same by the end of this week," said Sharma. "No explanation was given to me why the earlier promised discount has suddenly been withdrawn." Sharma had sold his one-bedroom apartment in Andheri about three months ago to shift into a bigger one.
Sharma and others can blame the sudden change in fortune on the recent repo rate cut by the Reserve Bank of India, which has made real estate developers hopeful that sales would pick up and downward pressure on prices reduce. And it is not just limited to Mumbai, as even National Capital Region (NCR)-based developers have suddenly stopped bargaining on the price front.
Industry experts, however, seem to think differently.
"Last year, buyers had to defer their purchase decisions as they were facing rising interest rates and stubborn price levels," said Anurag Mathur, managing director, Cushman & Wakefield India. "Some buyers may (still) hold out for a while longer to see if there are further rate cuts."
Developers hold that the rate cut could add optimism to the otherwise slow-sales market. "We had accepted three bookings for our project at Rs. 11,000 per sq ft, and we to offer freebees," said a developer on the condition of anonymity. "But now the demand will be back, and so we are not going to give any discounts."
Even the real estate industry body is hopeful that sales may see a jump post the "sentimental push" by the RBI. "The rate cut would obviously increase sales as loans would become more affordable," said Paras Gunecha, president, CREDAI, the real estate industry body.