Real Estate prices across Chennai market has seen a
correction across the board according to the Residex scores released
recently. This is mirroring the trend
across India. The prices which has
fallen the steepest in Chennai are Myalapore and Velachery.
With the recent RBI action of stopping the 80:20 schemes,
the builders would be under higher stress for funding. They have been valiantly holding on to the
price levels but something to give. In the earlier instances, the buyers had
given in but this time my hunch is that the sellers would give it in. They would no longer be able to borrow to
support the prices artificially. If few desperate sellers start the distress
sale, all others would fall in line.
As far the real estate prices are concerned, I believe that
further price drops are possible in the suburban areas. Already the builders are open for
negotiations on price and instead of being selective; they would announce price
cuts across the board. The number of
unsold flats in the suburbs is a good indication of the impending possible price
correction.
The spate of new launches has gone down and the classifieds
section in newspapers has more advertisements for sale. I recently read that during the 90’s real
estate meltdown, the prices corrected by more than 40% over the period of 1996
to 2000 in Mumbai. Is it fair to expect the same amount of correction across
the board? May be, not. The price
correction would be location specific.
I think it is becoming buyers market after a long time.
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