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REAL ESTATE MAY CRASH BY 60%, IS THE REALTY PARTY OVER ?

Real-Estate-3This report should spell good news for customers who haven’t bought homes due to sky rocketing prices. The real estate has dipped further with sales coming to a virtual halt. Experts of the industry say that in the next six months, the real estate market will crash by 40% to 60%. Is the realty party over? Find out the answer with our weekend exclusive. These are not the first signs but they are definite ones. After NMTV team met experts of the industry, checked statistics and conducted a market survey, it looks like the realty balloon is set to burst. The first indications of realty market showing a dip began with the Builders Association of Navi Mumbai’s annual exhibition in December last year and these signs concretized during the property fair organized by the Maharashtra Chamber of Housing Industry at the Bandra Kurla Complex last month. Builders are quoting such exorbitant realty prices that it is now completely out of the comfort zone of buyers of any income group, in fact; it is beginning to hurt them. Not surprisingly, all registrar offices across the city hold deserted looks. Officials at these offices are not hiding the fact that the market has come to its worst halt in recent months. The reason for the expected crash in the realty market? Fall in stock markets. * Increase in interest rates leading to higher costs. Income levels of potential buyers have not risen in proportion to the increase in property prices. * Rising input costs of steel, iron and building material, will result in delay in project completion leading to financial constraints. * Many residential buyers are waiting a price correction before buying a property, which can affect development plans of builders. * IT industry is continuously experiencing a slowdown; there may be further constraints on residential as well as commercial demand since this segment accounts for 70% of the total commercial demand. * High prices quoted by developers, which are beyond the reach of even the upper middle class. * Real estate companies and builders across the city are finally feeling the heat of the artificial hype in the market. And this isn’t just locally. The meltdown in property valuation in economies has been reported in many countries but the Indian realty market is the second worst hit in the world and this city is witnessing one of the biggest drops. And the drop has left no scope for builders to cover up that the realty market is seeing its worst halt. They however, accept the same with some caution. For home buyers affordability is indeed an issue that leaves them no choice but not to purchase property at this point in time. And there is one point where builders and buyers are thinking alike – they it is time for price correction and realty check. Already economists are predicting a slowdown in the GDP growth in 2008-09, as higher inflation is likely to force the Reserve Bank of India to hike interest rates, which like other sectors will impact the realty market further. The NMTV market study confirms that in the coming six months, the realty market will crash between 40 to 60%. This endorses previous NMTV reports on the pending crash awaiting the realty market and gives hope to new buyers to invest in a realistic market. The unending euphoria of real estate sector in India witnessed during the last few years is finally starting showing signs of ebbing. The talks of new malls, complexes, residential projects being built are all now being kept under bags. The rise in inflation, high interest rates and a potential global recession has fuelled the dangers of having unreasonably high property prices. With buyers stretching affordability to the T, it’s no surprise that the realty party is over and unless corrected now, the 40% crash in the realty market will only be the beginning. With Rajeev Mishra and Zeba Warsia for NMTV News.

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