Hitherto, we saw the middle-class of India complaining about the incessant increase in the prices of property in India. But now this wind is also blowing towards the richer middle-class and the simple reason for this is untamed inflation. And that in return has affected the dip in the sales figures of luxury premises. This decline in the sales of property can be seen in states across India. For instance, an apartment with price tag of Rs. 5 crore is now available with a discount of 35 percent. And on the other hand, if you come to Gurgaon in North India, you will find a premium space priced between 4 to 5 crore is now available at a price that is almost half of the previous. Similar is the situation in Bangalore where the prices have reduced by 20 percent .
Experts are of the opinion that at the time when economy is not doing well and purchasing power is cut down then ‘Realty’ is the sector that gets worse hit. Builders and property brokers with their lamented face are claiming that this situation has been there from couple of months and selling luxury homes at places like Mumbai, Gurgaon, and Banglore etc. has become a herculean task. There are reports from insider sources that the businessmen those who used to siphon off their excess income are also facing losses and liquidity crunch with the effects of rupee reaching to a record fall.
This gloom in the realty market has its ripple effects that can be seen in upcoming projects. People who have invested in these projects are offering a resale of their spaces at 20 to 30 percent discounts. For example, someone who has bought an apartment at the price of 5 crore, he is now reselling it in 4 crores. Some of the experts though have a completely different view of this downfall in the demand for these luxury homes. They say that the developers of these luxury apartments did not realize or evaluate that the buyers of this segment constitutes a small part in overall demand for property. So, now the situation is the other way round, where we have 10 homes for sale and there are only 3 buyers for it.
Similar to this situation in Mumbai and Gurgaon, Bangalore is another place where demand is less and supply is excess in the luxury housing segment. In Banglore alone the development of these luxury spaces constitutes some 40% increase in a short span of 9 months. There along with the high prices of these properties and the slump in the IT industry have put their weight in the declining of the sales.
Although, the affect of this slowdown is felt only in the metros like Mumbai, Bangalore, Gurgaon, Pune and etc., yet we will see its effects in other states too. Now, the people who are near their retirement may turn to other adjoining places of these urban locations and thereby the prices of realty may increase in that part of the area. For instance, someone who was looking to settle down in the helter-skelter and vibrant Gurgaon, may rethink of buying property in places like Bhiwadi, Rewari, Shona and other various places in the vicinity.
As they say whatever happens, happens for good, this seems to be working appropriately not for the sector or real estate brokers but for the consumers or buyers of property in these locations. Now, the inflated prices of property will actually go through a correction phase.