Developers are unlikely to take up major cuts in property prices although the market is going through a slowdown amid the pandemic, as prices have already bottomed out, according to a report by 360 Realtors.
It noted that past experiences have yielded that in bearish markets, generally, developers try to reduce property prices to drive demand, but in the past few years, property prices have already bottomed out.
“As developers are already working on shoe-string margins, a further arrest is a little difficult,” it said.
It also said that partially lockdown has been suspended in most of the places, so, real estate sales will pick up shortly and it will further be augmented with the help of some attractive schemes by developers, giving upward thrust to the market, despite an overall muted sentiment.
A 360 Realtors survey of major developers in several cities indicated that any steep price cut is far-fetched. However, against aggregate trends, there will be developers giving discounts, especially in slow-moving inventories. In such cases, developers will like to absorb losses with the major intent of turning around the inventory, it said.
The report, although anticipates largely no price correction, showed that in Delhi-NCR, price corrections up to 3 per cent might be visible in the affordable and mid-income segment and in the larger ticket size units, correction up to 7 per cent might unfold. In MMR, the affordable segment of Rs 50 lakhs-2 crore can witness a correction of around 3.9- 8.2 per cent.
Ankit Kansal, Founder and MD, 360 Realtors, said: “The major cost of construction includes land prices, labour costs and material costs. Now nothing among them is going to reduce. Rather, they will rise further. Land prices are not coming down. Similarly, labour is not readily available at the moment.
“Construction material prices will also increase due to disruptions in the global supply chain. Under such circumstances, there is a very thin chance of any further price correction,” he said.
The survey also found that Pune continues to be a dynamic market despite slowdown after COVID. Affordable property prices, attractive payment plans and IT and ITeS workforce are feeding the demand.
Like Pune, Bangalore is also showing similar positive sentiment, it said.