Soon after the RBI Chief Raghuram Rajan pinching for lowering prices for the properties last week, the realty experts have also nodded for a similar thought. According to the realty experts, a price down can be expected in the next few months, but they have expressed concerns over the developers focus on moving out the inventory.
With numerous realty developers engaging in the construction of properties in NCR, buyers have become biased to choose the right one. This has paved way to the decline of sales. Much worsening the sales is the high prices put forward by the developers, which altogether have bought the severe problem of inventory pile up.
Expert opinions reveal that 35% to 45% of apartments in NCR have been in vault, which marks all time low sales of property in the last three years. Both Rajan and now the experts have called for lowering of price, much ideal solution to curtail the inventory pile up.
For the builders, it is wise to clear their properties so that they keep the business running healthily and fulfilling further commitments of the buyers. For home buyers, it is all to get their dream home. So if the builders can afford a slight rate cut, speaking precisely, if they are willing to sacrifice a little profit amount, the inventory pile up can be solved.
On the other hand, the builders are burdened with pending dues for leasing charges of existing land. Also with the hike of construction costs, the chances are least favourable for a price cut amid low demand. Even if the solution for the pile up is much needed, builders who are stretched due to these financial biases can be expected to wait for a while to take the decision.
Laws are also not in favour of the realty developers. With the new government proposal, developers who fail to renege on delivering homes for the buyers are accountable for fine. They may also have to provide some extra benefits as penalty to the buyers in case of failing to deliver property within deadline which are not mentioned in the earlier proposed plan.
Boosting the agony for developers is that the apex body of the private real estate developers, Confederation of Real Estate Developers Associations of India (CREDAI) is planning to debar its members who have failed to keep their deadlines in delivering homes to the buyers. So by lowering prices, which thereby hikes the property selling, developers can not only witness good sales but also can escape from the shadow of law too.
A project pile up will affect both the developer and the home buyer with same potential. While the former faces financial strain, the latter will never get their dream home. So with the price down, both the buyers and developers are mutually satisfied. So under the prevailing circumstances, it seems like lowering of realty price can be a solution to the much awaited inventory pileup, not only in NCR, but also its competitive metro cities like Mumbai and Bengaluru.