Property rates headed south

Six months ago, Rahul Sood’s three-bedroom apartment in south Delhi went on the market for Rs 95 lakh. But the market was booming and Rs 1 crore looked easily gettable. He decided to wait, and that turned out be a wrong call.

The market began slipping and he managed to get Rs 85 lakh for the flat, Rs 10 lakh less than the peak-time price tag. The same apartment is now valued at Rs 65 lakh.

Sood is not feeling so bad now.

Realty rates are slipping across the country. They are down by 15 per cent in Chennai, for instance. In Mumbai, the market is sluggish — sales have slowed down — but it is holding out bravely.

Global realty firm Knight Frank’s latest residential market review says there has been a price correction of nearly 15 to 20 per cent across the National Capital Region, particularly in Gurgaon and Noida, due to inflation and high interest rates.

Pranay Vakil, Knight Frank’s India head, says, “The price slash is also due to the problem of oversupply in this area and the decrease in the number of buyers.”

Areas like Greater Noida and Faridabad will also face price correction on account of the large number of houses/flats expected to be available soon.

“The market will stabilise only after the supply is met with substantial demand,” the report says.

Ankur Srivastav of DTZ, a leading real-estate consultant, says there is going to be a surplus of accommodation in the premium-segment brand — in the price bracket Rs 75 lakh and above — in the next 18 months.

"There are a dozen premium projects coming up in Gurgaon and Noida," he says. "Once they are completed, they will increase the pressure on prices."

However, some other developers don't think the market is going down. Sanjay Chandra of Unitech Ltd says, "In fact, quality products in good locations continue to fetch a premium." But he does concede that the volume of transaction is down.

Anshuman Magazine of CB Richard Ellis says barring a few cases, the overall market in Delhi has not been impacted by the lack of demand. It happens every year around this time.

The buying season starts in September, around Diwali. If prices start climbing again, the current correction would be just that: a correction. But if the slide continues, that would be end of the big property boom.

(With inputs from HTC, Chennai)