The recent rate cuts have failed to stimulate demand and transaction volumes have literally dried-up. There are almost no takers for luxury apartments and most buyers in the mid-income segment find homes priced above Rs4m unaffordable. Buyers are still in a wait and watch mode and are expecting prices to correct further. Many are willing to buy only at prices 20%-30% below what sellers are quoting today.
Prices in the resale market have fallen by up to 25% and could decline a further 5%-10%. Some small developers who have failed to start construction on their projects even 1-2 years after launch are being forced to refund money to customers. In such cases there are several instances of bouncing of cheques issued by developers and developers issuing post dated cheques (due after 1.5 years).
In some cases, where developers offered assured return schemes to buyers of their office / commercial properties, developers are borrowing funds from banks to pay the assured return promised by them.
Developers not paying commissions due to brokers for over a year and defaulting on installments due for land purchased at high prices in auctions are other instances of the severity of the liquidity crunch being faced by the real estate sector.
No comments:
Post a Comment