Real Estate Price to Decline after Gold?

By SiliconIndia   |   Monday, April 22, 2013
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Bangalore: Recently, the correction in gold prices has forced many buyers rush to the jewelry shops and at the same time it has raised question whether the real estate would also see any correction in the coming days. Gold and real estate are considered to be the safest investment options that fetch better return on investment over time. That is why Indian retail investors have gradually started to shift from equity to gold and real estate, over the past few years.

People are also wary about the fact that the recent drop in gold prices will be able to give same returns over future or it will depress investors as the price dropped by 20 percent from the peak. In this volatile market situation, whether the next big asset class after gold, real estate segment will also witness correction is the question raised by many. It is known that the real estate segment is becoming unaffordable for many due to increase in property prices, reports Jwalit Vyas of Economic Times.

However, due to the lack of no proper long term real estate index in India, the correlation cannot be demonstrated.

But when it comes to real estate, the prices do need correction. The demand for housing units has weakened because of soaring prices and so, developers are now sitting on a huge bulk of unsold inventories. For example, of the total 5.2 lakh housing units being constructed in Delhi-NCR, over 1.4 lakh housing units remain unsold. According to the latest Knight Frank’s report, the residential market of NCR has been witnessing steady price appreciation albeit passive demand in the market.

"Nearly 5,20,000 residential units are under various stages of construction in the NCR market...The NCR residential market has an estimated 1,40,000 units of unsold inventory which is approximately 27 per cent of the units under construction," Knight Frank said in its report, reports PTI.

However, the conclusion cannot be drawn based on the current situation, if home buyers plan to buy a house but are holding their decisions due to high prices, they can wait for price correction or have to go with the current market prices.

Also Read: No Tax on Inherited Property in India for an NRI

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