The real estate market is witnessing strong deals at an ever increasing price, but there are good chances of the market getting stable within six months, leading to a correction in prices.
Is the realty market heading for a mid-term correction? At least, this seems to be apparent from the number of bidders, who came forward for a plot's auction, located off SG Highway, on Monday.
Only 10 bidders showed their interest for the plot, of which few were developers, noting that the expectation was much higher.
The real estate market is witnessing strong deals at an ever increasing price, but there are good chances of the market getting stable within six months, leading to a correction in prices.
"There will not be sudden crash in the market, but it will slowly fall to 15% - 20% in some areas," said a real estate player.
The plotted schemes in the areas surrounding Ahmedabad may be worst affected, while schemes of residential bungalows located on the outskirts of the city may witness correction of up to 20%, said sources.
Sources also said that, residential market might turn stagnant as residential schemes in South Bopal and other areas will soon be available in the market. Majority of the properties in residential market are booked by investors, which will also come in the market as finished inventory after completion of these projects.
As a result, some of the developers, who had borrowed money from the market, may choose lowering their rates, said sources.
There is also a possibility that developers who are quoting around Rs4,500 per square feet may lower the rates to Rs3,500 per square feet, but it would not be in the immediate future. However, there is also a possibility that, it might go up after the consolidation phase, as it was witnessed in the past.
One of the leading real estate consultants in the city said that, boom and slump are cyclic in nature, so none of them are going to be permanent and will follow one another. The market is reaching its peak and so it is likely to go down. "At present, money is circulating in the market. When it stops, rates will automatically stop rising," he said.
On the other hand, one more realtor said that, even if there isn't any correction, the growth rate is certainly going down. If one has to witness around 35% - 50% appreciation in the value of property, it would be around 10-15% in the coming months, he said.
It should be noted that in the recent survey conducted by ICICI, around 76% potential buyers found realty prices, unaffordable.
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