Realty does reality check, prices fall 15-20% in Q

NEW DELHI: If high prices have been holding you from buying your dream house all these years, here’s something to cheer about. In the first quarter of this year, there has been a 15-20% price correction in markets across the country, especially in the residential segment.
In fact, in many markets, the level of transactions have gone down drastically, which has resulted in this dip. This is also because residential capital values in some micro markets in the metros have shown a negative growth in the last one quarter.
After tracking capital values in metros such as Mumbai, Chennai, Bangalore as well as Pune and the National Capital Region (NCR), the result was that either there has been a fall in prices of residential values or they have not increased in the last three months. In fact, places like Gurgaon have seen a dip of 15%, while the plot rates have come down by 20% in Noida. In Greater Noida, the plots which were selling at Rs 55,000-60,000 are now available for Rs 40,000 to Rs 45,000. In Indirapuram, rates of flats have come down to Rs 2,500 to Rs 2,700 per sq ft from Rs 3,000 to Rs 3,200 per sq ft.
Even prime areas in Delhi such as Friends Colony, Maharani Bagh, GK I & II, Prithviraj Road and Hauz Khas have witnessed a 5-10% fall in the prices
However, in Mumbai, prices at Colaba, Cuffe Parade, Central Worli, Bandra and Juhu have remained stable in the last three months. The story is the same in Bangalore, Hyderabad and Chennai where the market has not witnessed an increase in the last one quarter. In Pune, localities like Kalyani Nagar have witnessed a dip of 15% in residential values in the last three months.
Says Shveta Jain associate director (residential) Cushman & Wakefield India: “The exceedingly high price points and spiralling interest rates have contributed to a reduction in interest from speculative investors due to decrease in holding power, resulting in a clear shift to a largely end-user-led demand. More price sensitive locations and developments in certain parts of the country have been witnessing a rationalisation of capital values in recent months, wherein the market is finally reaching price thresholds.”
Agrees Santhosh Kumar, deputy CEO of Jones Lang LaSalle Meghraj (JLLM), a property consultant. “In the current real estate scenario, what is being observed is a stabilisation of select markets. A consistent upswing is not possible in any market,” he says.
“When a large level of supply is in the offering. Real estate markets have observed high growth levels in the recent past. However, in certain areas, market stabilisation has been observed. This indicates that there are not many buyers for the prices quoted for various real estate typologies at this point of time,” says Santhosh Kumar, deputy CEO of Jones Lang LaSalle Meghraj.
In fact, Sunday ET spoke to a number of developers, but they refused to comment on the price correction. But they agreed that there was a slowdown in the last three months. Many of them felt that the biggest risk to growth in this sector was sales to speculators. Of course, how this inventory build-up will affect prices going forward remains to be seen. Further, the developers’ tendency to divert money from one project to another — rather than to keep a financial cushion — can lead to a chain reaction, they added.
In various markets, despite a slowdown in demand, essentially from the speculative investors, developers have refrained from reducing rates and instead some of them have started offering incentives to attract buyers. Sales in secondary markets have also taken a beating with very few transactions taking place at relatively lower price points than market expectations.