Price correction happening in the realty market

Chennai - While stories of high prices and unsold inventory remain in circulation, realtors believe that the prices have hit a bottom in Chennai and aspiring home buyers need to take a call now.

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For the last few months, a lot of talk has been going on about the current pricing scenario in realty. While Chennai has been a rather steady real estate market, there has been talk of slow sales happening across different projects. In the recently concluded Real Estate Dialogue on the topic Triggering a Buy Building Consumer Confidence, organised by magicbricks.com, realtors from the city were of the opinion that there has been a price correction happening in the realty market.

While construction costs have gone up and there have been problems of unsold inventory, developers feel that many wrong notions are plaguing the minds of the buyers. "The rate cut by the RBI has not really been passed on to the customers by many banks. The truth is that there has been a price correction in the market and the sector has been showing marginal signs of improvement. The prices are also a lot more realistic," says Arun Kumar, MD, Casa Grande.

Developers believe that the lowering of prices has happened across every micro market in the city and there have been several other influencing factors. Haresh Kishor, Director, KG Developers, says that a major misconception in the market is that the prices have not corrected. "Many factors influence a buyer, such as location, proximity to social amenities and the project details. But across every micro market in Chennai, there has been a significant price reduction. These may come in the form of discounts or freebies that come with a project. In the suburbs of Chennai also, the prices have come down. Today, market prices have hit the bottom and they won't go down any further," says Haresh, who feels that the reduction has happened over the last two years.

According to the Housing Sentiment Index survey by magicbricks.com, 56 percent respondents said that they were waiting for the prices to come down further and only 7 percent of the respondents said that a high interest rate was a deterrent for them to buy a home. G Ravindranath, general manager of SBI, said that there has been a small upward movement in the average ticket size in the lending space and attributed it to a mix of inflation and increased aspiration among buyers.

Abhishek Mehta, MD, Urban Tree, said over the last seven months, there has been a steady rise in the number of sales registered. "An area like Perumbakkam has registered an increase in numbers and the demand has gone up in terms of value as well. So, if a buyer was keen on a flat costing 40 lakh, he is now willing to get a better flat for 45 lakh. The market has bottomed out and the ones who are looking to buy now have to take a call now to capitalise on the price. Also, a realtor is in a business and is looking for a minimum return on investment (ROI).Any price below this will not be profitable for him," he said.

VS Sridhar, managing director, Cushman & Wakefield, says that reports of oversupply in the market are sometimes exaggerated, as these are only in some micro-markets. "Even when such instances are there, the reason is not necessarily the project where the oversupply is visible. It also has to do with the amenities available around the place. Today's end users have many more options to pick and choose from than ever before," he says.

Source - TOI