As the economy continues to weaken, the real estate market has also started showing signs of weakness. Real estate developers and banking experts are predicting the official burst of the Indian property bubble.
Yes, it’s a fact that real estate prices across the country has softened in the visibly in the six months and have fallen between 1-6% across 22 cities out the 26 that are tracked by the NHB Index. For those who are in the know, feel that the current situation would last at least till the next general elections – developers would suffer some losses as investors and buyers would rather hang on to their money, hoping that property prices would fall further.
The general consensus is that the Indian real estate market and to a degree, even the banking sector doesn’t follow a logic, the kind that dictates the rise and fall prices which had led to the near collapse of the real estate market in the USA a couple of years back. What this means is that while the general slowdown of the economy would hurt sales, we would certainly not suffer a collapse, even a temporary one.
The fact is that even though the pace of sales has gone down, they are still happening. Let’s understand this simple fact that the negative sentiments of economic and political uncertainty is causing buyers to shy away.
Yes, there was an expectation that with the fall in the value of the rupee, NRI would be the first to come in and take advantage of the situation by investing heavily in property. That hasn’t happened as much as we had all hoped because people felt even though with the depreciation of the currency, the property they would invest in would be 20% cheaper. However, since the times are so uncertain, buyers were scared that if the rupee depreciates even further they still lose out.
That thankfully hasn’t happened. The rupee has already started showing signs of making a strong comeback, a full eight months before anyone had predicted. Investors who were holding back would now really rush in to invest. Prices are still down, but for how long will they remain so is anybody’s guess.
So I suggest that if you’re planning to purchase the house of your dreams, now’s the time to do so.