With low sales, liquidity crises and the general elections coming up, builders say there may soon come a time when they have no choice but to slash real estate prices.
“No sales are taking place at present, and we are seeing no signs of recovery,” said Paras Gundecha, former president, Maharashtra Chambers of Housing Industry (MCHI). “We may see some reduction in prices in the coming days.”
The Builders Association of India (BAI) said that a subtle decline is already visible.
“You can get a good deal by bargaining in this market,” said Anand Gupta, secretary, BAI. “There is a difference between the quoted price and what you can get by negotiating.”
Prices peaked in the past two years, at what most would call unrealistic levels. For instance, property rates in Malad are now quoted at Rs10,500 per sq foot from Rs5,500 per sq ft two years ago.
In Mulund, buying a house will cost you Rs11,000 per sq foot when two years ago, it was just Rs6,000 per sq ft. The situation in the island city has been no different, with Mahalaxmi’s 16,000 per sq ft spiking to Rs32,000 per sq ft.
Optimistic that the murmurs of rates falling will one day turn to reality, homebuyers are also playing the waiting game. Mitesh Gala, a tutor who earns Rs50,000 a month, said “The present rates are completely unrealistic and I have stopped scouting for houses. I will wait for prices to fall.”
Gundecha said the reduction can be facilitated easily if authorities are serious about doing so. “If we get access to funds more easily, we do not have to depend on private lenders who charge exorbitant interest rates. We can then pass this benefit on to the buyers,” he said.
Real estate consultant Ajay Chaturvedi said the prices could come down in the next six months.
“The foreign investments have dried up and now with the 2014 elections coming up, most politicians who have invested their money are withdrawing it.”