Developers to cut prices by 5-10%

Good news for property buyers! Mr. Rohtas Goel, President of National Real Estate Development Council (NAREDCO) and CMD of Omaxe, announced that real estate developers have decided to reduce the prices by 5-10% across the country. He said that this move will attract buyers who were just waiting for price reduction from developers into the market. Prices of apartments which cost over Rs. 1 crore will come down by 10% while those of affordable houses, in the range of Rs. 20 Lakhs to Rs. 40 Lakhs, will see a modest cut of 5%. They can not drop prices further because developers are already operating at a lower margin thanks to exorbitant land and commodity prices.

However, the big question to ask: Is it enough to attract buyers? hmmm..may be not. Property prices have zoomed to above 100-200% in the last 3 years and have become unaffordable to majority of middle class buyers. The rising interest rates have even more discouraged buyers from looking for properties. Even if interest rates come down from 14% to 11-12%, how many people will like to apply for new home loans or invest in properties in this gloomy world economy and uncertain environment? With private banks resisting to drop PLR and buyers not willing to look for loans, things may not be turn out to be the way developers want. This would be interesting to see how coming months unfolds for the industry.