There may not be price correction soon
A study by Magicbricks.com real estate web portal says residential real estate prices have remained stagnant for more than two years now and they are unlikely to see a major correction any time soon. The Indian real estate market has…

A study by Magicbricks.com real estate web portal says residential real estate prices have remained stagnant for more than two years now and they are unlikely to see a major correction any time soon.

The Indian real estate market has been stagnant both in terms of transaction activity and capital value of real estate assets. Residential units in many cities today cost the same as they did over two years ago, its analysis said.

In fact, when inflation rate over the same period is taken into account, the average price has actually fallen below the price prevalent two years ago. The prices may not have explicitly gone down, but the stagnation in capital values and inflation have resulted in implicit price correction. Prices are likely to remain flat in the short- to medium-term.

If high property price is the only criteria holding back consumers from purchasing properties, it does not explain large unsold inventory in cheaper markets or projects in lower budget segments across cities.

Budget segments in most cities witnessed only single-digit growth and again, when adjusted for inflation, the growth actually becomes negative. And while prices in many localities and segments (especially the premium segment) had increased beyond the affordable limit of consumers, this by itself is not explanation enough.

 

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