Housing Demand Fall In Small Towns

Slump in the residential real estate sector in tier-1 cities seems to have spread over to tier-2 and tier-3 cities. Housing demand in small cities got down by 25% during February-July this year because of higher cost of borrowing. Besides rising cost, unavailability of inputs and power shortage also cause excessive delays in project completion.

The study by the Assocham said that realty transaction has gone down by nearly 25% in most of tier-2 and tier-3 cities between February and July of current financial year.

Assocham secretary general D.S. Rawat said that Approx fifteen million people in tier-2 and tier-3 cities were unable to make purchases as higher inflation and interest rate have dampened their enthusiasm and eroded their budget.

The Assocham study is based on feedback from affiliated real estate majors like Parsvnath, Omaxe, DLF, Unitech, and BPTP, which are developing projects in small towns.

One Comment

  1. Posted September 9, 2008 at 1:40 am | Permalink

    As builders are facing a fall in residential demand, they are trying to woo home buyers with cars, fitouts, parking discounts. Especially the Bangalore property market, which has entered the wooing phase with home buyers being offered gratis cars, lifestyle accessories and clubhouse memberships as inducement. According to people familiar with property market, this initiative is unhealthy. They are doing this as they have put their money into properties at overheated locations and are now desperate to exit. “When looked at closely, these incentives do not have any significant monetary value. Rather, they are psychological encouragement put in place to catalyse the project’s off-take. Gratis offered by investors or speculators is valued around 12-14 per cent of the flat or plot price,” said Mr. Anuj Puri, country head, Jones Lang LaSalle Meghraj. This practice is not unique to Bangalore, but is also practiced in other metros in less-preferred locations and more prominent in Tier II cities. “This phenomenon exists at some level or the other all over the world, but probably not with the lack of finesse and reservations that exist in India’s current real estate scenario,” he added.For more view- realtydigest.blogspot.com

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