Prices set to go down by 20% within 3 months due to impending global slowdown, say experts

Whileu00a0the Sensex's bear run with a cumulative fall of more than 700 points in the last two working days is giving investors and financial establishments sleepless nights, the impending global slowdown could actually be good news for home buyers.



There is an overwhelming consensus in the city's real estate community that the downgrading of America's rating and the subsequent tumble in global stock markets will give builders just the excuse they needed to do a course correction in prices to counter flagging sales.

The result? Realty prices in the city may see a 20 per cent fall across the board in less than three months.
The situation would be similar to the 2008 slowdown, when builders had slashed prices by 30 per cent to attract buyers.

And there's more good news: The 20 per cent reduction in prices is likely to stay for at least a year.

Paras Gundecha, president, Maharashtra Chambers of Housing Industry (MCHI) said, "The realty market seems to be headed to a situation similar to the one in 2008.
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Sales are slow as it is and builders have already started giving discounts to counter the gap in demand and supply. A correction of nearly 20 per cent could be upon us soon."

Gundecha attributed the slump in sales partly to decisions taken by the government and the RBI.

"Home loans have become costlier, clearance of files has become slower and the DCR amendment (charging the builder for free FSI) has been the icing on the cake. All these factors have adversely affected market and buyer sentiment," he said.

Manohar Shroff, secretary, MCHI-Navi Mumbai said, "Things don't seem very rosy with the new changes in the real estate market.

The slowdown and the market collapse have affected sales and prices are likely to fall or remain stagnant for some time."

Experts' take
Pankaj Kapoor, MD, Liases Foras, a real estate research firm, said, "A correction was bound to happen and the excuse of the American slowdown is apt for builders, just like the 2008 Lehman issue was.
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The prices will come down by 20 per cent in the next two-three months.
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But, unlike the 2008 collapse, when the realty market recovered within eight-nine months, the market should remain stagnant after the correction for at least a year or two this time."

Explaining the reasons for this, Kapoor said, "Investors are shying away from the market, forcing builders to target the end user.
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And, to sell their flats to end consumers, they need to understand their budget, which is way lesser than the prices being quoted by builders currently. They are, thus, left with no choice but to reduce the prices."

Anuj Puri, chairman, Jones Lang LaSalle, a real estate consultancy firm said, "The US credit rating cut and uncertainties about Europe's debt situation is a cause for concern.

There is an overwhelming consensus in the city's real estate community that the downgrading of America's rating and the subsequent tumble in global stock markets will give builders just the excuse they needed to do a course correction in prices to counter flagging sales How do you like the new new mid-day.com experience? Share your feedback and help us improve. Read Next Story Fishermen RAK-ed with fear› Trending Stories Latest Photos Latest Videos Latest Web Stories ADVERTISEMENT Mid-Day Fast ADVERTISEMENT ADVERTISEMENT ADVERTISEMENT