High Property Prices Weakened Festive Spirit

Bangalore: Diwali is believed to be an auspicious time to invest in property. But this year, the real estate market has failed to draw more number of buyers due to high property prices. According to Anuj Puri, Chairman and Country Head, Jones Lang LaSalle (JLL) India, "Residential real estate rates have risen in Mumbai and Delhi during the past three quarters, though the price rise is not backed by proportionate demand,” reports Preeti Kulkarni of Economic Times.

Gulam Zia of Knight Frank India stated that "This trend is common across the country except Bangalore where the scenario is slightly better. The festive season was supposed to provide a boost, but it has not reflected in the demand so far. However, the season has just started and the situation may change in the coming days.”

However, interest rates for home loan are declining but still buyers are not stepping into it because of high property prices. On this context, zia said that "Interest rates have to decrease substantially to spur noticeable buying activity. Even if that happens, chances of an all-out increase in demand look slim.” But, according to Puri, "The most important criterion in the current scenario is overall affordability, in which the actual unit pricing plays the leading role,” reports ET.

"After all, the prices are not going to come down substantially, by say 25 percent, in the next six months. It is not worth waiting for a price reduction of just 5-7 percent,” added Zia. Also, buyers need to think when buying under-construction property. In such cases, going rates are lesser than the properties that are ready for possession. "Launches are already pegged at marginally lower rates, but completion timelines of many of these properties could be in question due to the liquidity crunch," added Puri.

Even if potential home buyers are planning to invest in property at this time then it is always better to seek promising location. According to Puri, "If the purpose is purely investment, it is advisable to look at upcoming residential destinations on the peripheries where price points are lower, provided that the areas are seeing sufficient infrastructure and connectivity augmentation," reports ET.