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Property prices likely to fall by 25 per cent in next quarter

This article was posted on Nov 20, 2011 and is filed under Market News

New Delhi: The real estate market, witnessing a big drop in sales and a consequent cash crunch for realtors, is likely to see a sharp decline in prices during the January-March quarter, according to property experts.

“The realty market is over-heated at present. We expect prices to come down by at least 25 per cent by the next quarter,” Sachin Sandhir, managing director of Royal Institution of Chartered Surveyors (RICS), South East Asia, said. “Home buyers are holding back their decision to buy property. The sales in Delhi and Mumbai have gone down drastically,” he added.

As a result, property developers are taking desperate measures to keep their accounts out of the red. Large developers like DLF and Unitech have already started selling plots from their land bank and other developers are also looking at similar sales to generate more capital.

According to the Reserve Bank of India (RBI) figures, Indian developers held a total of $ 24.4 billion (about Rs.1,24,147 crore at current exchange rates) of outstanding credit at the end of June this year, which was 23 per cent higher for the corresponding period last year. With a continuous rise in interest rates, developers are struggling with the debt burden that has to be repaid every month.

“Fund availability is expected to be a concern on the back of a number of loans coming up for repayment in fiscal 2011-12 and interest rates are likely to remain at an elevated level,” Adhidev Chattopadhyay, analyst with Edelweiss Securities said.

Experts said that even if there is no change in the prices of projects which have already been launched, new housing projects will be offered at much lower prices. For more visit: MSN.com

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