Time to buy...

Is it time to look at purchasing property? Has the correction set in? These are questions most property seekers want answers to.

Realtors, buyers' opposite views hit housing market: ICRA

Here’s a reality check:

Experts in the industry believe it would not be appropriate to assume and wait in anticipation that the property prices will come down like in the stock markets. It is unlikely, they feel.

‘Realty market to see mismatch in demand-supply’

However, buyers need to be cautious about where they are investing and opt for either well established builders or projects that are nearing completion or they warn that their investments may be locked up as projects may not be completed for want of funds. In an interaction with senior executives of real-estate firms, a few common trends emerged.

Downturn now, pick-up possible

The Chief Executive Officer of Lanco Hills, S. Pochender, said, “overall the mood is apparent and is somewhat downturn. We expect such sentiment to remain for anywhere between three and six months and the market will again pick up.”

Chennai sees correction in some pockets

However, Pochender said, “we have no reservations about saying the market will take off again and possibly get much better than what it is today.”

As the interest rates are likely to ease a bit more due to regulatory actions and banks possibly slashing rates, buyers will look at acquiring properties again. Generally, there is a tendency to postpone buys, given the current market sentiment, he said.

Wanna buy a home in US?

“The real-estate market went into a hyper boom phase and people purchased properties as if all the land bank available was getting exhausted. This resulted in a steep hike in prices. As the market went up beyond sustainable levels, this kind of correction was on the cards,” Anand Reddy, Executive Director of PBEL, said.

“What is interesting about the current scenario is that the prices have already corrected by 15-20 per cent. Buyers can now take much more informed decisions then ever before and pick and chose from projects,” he said.

Nagarjuna Construction puts real estate projects on hold

Consolidation on the cards

The Chief Executive Officer of MAK Projects, A. Murali Krishna Reddy, said “if the years 2006-07 and 2007-08 witnessed enormous growth in the real-estate market and prices, it is now a phase witness to correction, driven by both external and internal factors.”

Private equity deals in realty sector down

Asked about the construction industry itself, Krishna Reddy believes that consolidation is on the cards. While big ones with financial muscle will continue their growth or may delay some projects, small developers who are dependent on buyers’ money to execute projects are under pressure.

On builders possibly changing their strategy and focussing on middle-income group apartments and houses, Anand Reddy said, “generally, the quality of construction has gone up in recent times and people’s expectations are also high. We expect all types of properties to be developed.”

Land prices firm, for now

Zones with special incentives

If you look at any project, of the Rs 100 spent for project work, about 40 per cent goes into Government kitty in some form of taxes. Therefore, it is time to look at this afresh. Possibly, Government could consider zones with special incentives which will help make housing more affordable, Anand Reddy said.

A lot of funding from overseas led to local prices shooting up, coupled with buying through domestic loans. While the former RBI Governor, Dr Y.V. Reddy, cautioned against this rapid growth in real-estate prices, no one was willing to look into this aspect as the market continued to boom.

Cautioning against herd mentality of purchase or sale of property, Krishna Reddy said this is time to invest as land prices stopped going up about a year ago and built-up space is also witness to correction. Due to choices, buyers could get good deals.

“Despite concerns of slowdown and some price correction, Hyderabad continues to be a vibrant market and people continue to invest. I am against bargains as this only exposes those who have priced steeply. In fact, if you look at Lanco projects, we arrived at a fair price and have stayed with it despite the spiralling cost of materials,” Pochender said.

Trends in Hyderabad

A recent study of makaan.com analysing property trends in Hyderabad shows that 38 per cent of property seekers are very specific about preference of choice of purchase of their property and the rest are willing to buy a property anywhere in Hyderabad.

Depending upon the location of property, there has been a slowdown in demand ranging between 11 and 12 per cent.

More India business stories

Broadly classifying Hyderabad into three major areas of Hyderabad, Secunderabad and Greater Hyderabad, the report finds that the demand is highest in Hyderabad, followed by Secunderabad and Greater Hyderabad.

The demand equation for residential property indicates a huge appetite for properties in the sub-Rs 60 lakh segment. Significantly, the Rs 30-60 lakh segment is where there is shortage of supply while Rs 60 lakh and above has oversupply.

This only illustrates that there is demand for affordable housing, the report noted.
Mo