3rd of the series
Track2Realty Exclusive
Analysts believe that further price correction may not happen in the metros and suburbs due to the holding capacity of the bigger developers, but lack of funding options may force some standalone local builders to drop prices. While the metro and suburbs property prices seem to have stabilized after correction of around 10-35 per cent, speculators would like to exit the B and C Grade cities fearing the end of high appreciation.
Along with the question of whether the right time to buy property comes the question of where to buy? Areas where infrastructure is being developed are the better bet and the best option would be to look at ready-to-move-in properties as they are the least risky. Some trade analysts believe the property market may bounce back in the next 3-5 years and prices will recover.
However, most of the realty experts suggest there will not be another 200-300 per cent increase. A case study in point here is Mumbai where property brokers assert that the prices of apartments have started moving up because of revival in demand. As the city does not have much supply, a slight recovery has already pushed prices up in posh areas by 10-20 per cent.
However, the road to recovery for the realty companies is not that smooth. Many of the front line realty players are deep into debt, and their stock valuation has also nosedived. The boom period of real estate in India from 2005 to 2008 actually led to unrealistic valuation for the property and its stocks. However, it has fallen flat in the wake of economic uncertainty and property prices came down between 10 to 35 per cent from the peak level depending upon the location.
The debate as to whether this is the right time to buy a property is endless since market sentiments is something that no analyst can gauge perfectly. However, the era of too fast capital appreciation in real estate, in some cases by 300 per cent, signaling a lot of liquidity and speculation in the sector seems to be over. While that may not be good news for the builders, for the common man on a house hunt it could be a blessing in disguise. The only rider here is the high interest rate.
