Yes, its time now for some Realty check. It doesn't need a rocket scientist to figure out the slowdown in the real estate market. For some reason the term "slowdown" is being widely used now. We tend to refer everything as a slowdown if its not progressing the way it was projected. I beg to differ. I am sure others will too.
I am referring to the ever booming real estate market in India. After all, a house is one of the basic needs. But, a 1 crore house may not be a basic need. Its a wish. Its luxury and a perfect display of affluence.
The other day I was reading an article that talked about top 10 countries in terms of inflation. Zimbabwe is right at the top with 355,000%. Their government just rolled out a $ 500 million note. Oh yes, their currency is also dollar - the Zimbabwe dollar. The 10th country in the list is Serbia with an inflation of about 15%. We are now competing with them. For all practical purposes the inflation has touched 10% here. So, in days to come everyone will be crore-pati in India. We will become the land of millionaire/billionaires/whatever again. Imagine an auto rickshaw charging 50,000 for a ride from Chandni Chowk to Red Fort(its about 100 meters). Love Story 2050, anyone?
The point I wanted to make is the exorbitant real estate prices in some (sub)prime(its a doomed term by the way!) locations in our new age country. The other day I was watching CNBC Awaaz, and they came up with a nice report on hammering on real estate sector. Although the real estate developers are running out of cash, a substantial number of projects are delayed, new ones are waiting endlessly for buyers but still the price refuses to ease. They say that they are waiting for Diwali - they expect buyers to turn up by then.
They are ready to incur losses and let the projects be delayed than lower down the price. The reason is simple: they don't want the prices to go down. If it happens once then the real estate prices will become susceptible to market conditions as all other commodities - good for the customers. But, if they stop it from happening now, they think they will keep the prices isolated and unaffected by market conditions, and continue to reap rich dividends. I am sure you'll agree that the prices are atleast double of what they should be. Every broker or an agent is a market maker. They decide on price on the run. If you drove to them on a Santro - you'll get a different quote from someone who drove-in on a Sonata.
I am sure this will not happen for a long time. They are a part of the system after all. They will have to correct themselves or the market will force a correction. Buyers are well aware of the fact and they are expecting the prices to go down soon. But, it seems unlikely before Diwali this year. Lets hope for the best. Lets hope that the customer becomes the king again.