Waiting for a Good Deal? April-May Might Be the Time
Potential home buyers who have been deferring their purchase decisions might need to wait till April-May to get a good deal. The ongoing financial crunch, coupled with mounting pressure from various other circles, will peak between January and March, forcing many developers to sell unsold stock at a much cheaper price.
Developer Pressure Builds Up
- Holding On Till Festive Season: Anuj Puri, Chairman and Country Head of Jones Lang Lasalle Meghraj, notes that developers are already offering lots of freebies and will hold on to prices till the end of the festive season.
- Price Crash Expected: If sales don't pick up in the current quarter, the Jan-March quarter will see a price crash in some pockets, and in the first quarter of the next fiscal, developers will be forced to sell homes at a much lower rate due to loan repayment challenges.
Market Scenario
- Cash Flow Drying Up: In the current market scenario, selling residential and commercial properties is the only way for developers to bring in some cash flow, as all other routes are drying up, adds Anuj Puri.
- Global Financial Turmoil Impact: India's property market has been among the hardest hit by the global financial turmoil, with high interest rates and gloomy economic prospects driving out buyers and squeezing funds for real estate developers.
Price Decline Trends
- Existing Decline: Property prices have already declined more than 10-20% this year, though in cities like Mumbai and Delhi, prices remain too high for the middle class.
- Future Predictions:
- Edelweiss Securities: Property prices are likely to decline by 10% in the current calendar and another 15% by the end of the current financial year.
- Knight Frank India: By the end of the year, developers will feel the real pinch of the current financial crisis, leading to price cuts early next year, according to Pranay Vaikil, Chairman.
Industry Insights
- RBI Rate Cut Impact: While the RBI rate cut improves consumer confidence, it might not reverse the ongoing market trend as most buyers prefer to wait and watch, say industry officials.
- Liquidity Challenges: With liquidity remaining tight for India Inc, home loan rates might see some softening, potentially reviving demand in the residential real estate market, notes DTZ Director Ambar Maheshwari.
- Developer Financial Constraints: Many realty companies, having banked on the stock market and foreign investors for new projects, will be forced to sell existing stock at lower prices as these sources dry up with the global meltdown, according to Deloitte Haskins Sells partner Jayesh Kariya.
Developer Admission
- Transactions Down: Developers admit that there aren’t many transactions taking place, despite traditionally high sales during the festival season between Dusshera and Diwali. Consumers remain hesitant, translating to few actual deals from increasing enquiry levels, shared a Mumbai-based developer.