The Hindu Business Line : `Realty prices may dip 7-10% in six months'

Mumbai June 14 Is the realty sector set to hit a trough? The Mumbai Chapter of the Builders Association of India confirming a slowdown in housing stock sale over the past two-and-a-half months, says the drop is as much as 25 per cent.

The Association Chairman, Mr Anand J. Gupta, told Business Line here that the profits that the builder fraternity had booked during the last two to three years helped them to hold on to their stocks without going in for a price reduction. "It is the high price line over the past three years that has given builders the resilience to hold on so far," he said.

Discounts offer

However, there are reports of builders in the mid-size segment willing to offer discounts and freebies such as free parking and waiving the per floor-rise price to cash their properties.

Mr Gupta does not discount a 7-10 per cent price correction six month down the line when he expects the industry's resilience to fade.

`Passing phase'

The Vice-Chairman and Managing Director of Dewan Housing Finance Corporation Ltd, Mr Kapil Wadhawan, sees it as a temporary blip. Concurring with Mr Gupta that the sales had slowed down and "slackened a lot", he said it was good for prices to stabilise since in some places it had skyrocketed.

Optimistic of the construction industry's inherent strength to bounce back, he felt the temporary phase would not last long.

Sales had come down, but it was not what holds for the future. "We are looking at a 25 per cent growth and essentially our clientele are first-home buyers and in II tier and III tier cities building their own homes," he said adding that the industry's ability to hold on to stocks was a little unwise at the present juncture.

No dip in home loan

A senior HDFC spokesperson said there has been no dip in sales on the home loan front and viewed the crisis as investors shying away - more of those who wanted a second home - unwilling to take a plunge at this juncture.

He said the home loan growth rates were very much on the right track, moving upwards.

However, the high-end luxury housing segment, where private swimming pool, Jacuzzi and steam room come with Rs 1 crore-plus price tags have apparently been spared of the heat. Mr Vishwajeet Jhavar, CEO of the Pune-based Marvel Realtors and Developers Ltd, said: "as a pioneer in the automated super luxury homes, we have not seen any drop in sales in the niche prime segment we operate and have takers for our proposed projects in the pipeline as well."

The company is said to have sold the first Rs 2 crore-plus apartment in Pune.

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