The stagnation in capital values and inflation working together for the past 2 years have resulted in implicit price correction
NEW DELHI: In what may come as a sentiment dampener for fence sitters, a recent report by Magicbricks.com says home prices are unlikely to come down in the near future and the market is already at its lowest point.
Prices have either seen marginal increment or have actually gone down, shows a report Magicbricks.com’s latest Price Trend Report.
“The stagnation in capital values and inflation working together for the past 2 years have resulted in implicit price correction,” said E Jayashree Kurup, head of content and research at Magicbricks.com.
“On an average, properties today cost the same as two years earlier. This is the implicit correction in prices,” she said.
The report evaluates the weighted average price for 11 major cities for a two year period from quarter ending July-September 2013 to July-September 2015.
Delhi witnessed the largest drop in prices of around 15% over the last two years. Pune seemed to have seen a double digit growth of 11.8%, but the increment was nullified, after adjustment for inflation. Chennai & Bangalore registered a price increase of 10.8% and 7.6%, respectively.
According to the report, high capital value is not the only reason holding back consumers. “If this had been the case, it does not explain the large unsold inventory in the lower budget segments in each city,” said Kurup. With few exceptions, the prices in three lowest budget segments across each of the 11 cities have not even seen 10% growth over last two years
Additionally the report says the large unsold inventory being talked about is not homogenous. Projects are in different state of completion. “Consumers are likely to opt for projects with visibility of completion or by developers with good track record. Such projects/developers have no incentive to reduce prices,” it said.
And even if deep discount is available in projects in early to intermediate stages of construction, a consumer might not opt for the same if he is not sure of delivery timeline or reputation of the developer, it added.