House Prices In Jaipur Nosedive

Now, it’s official. House prices in Jaipur have crashed the most in the country during January-March 2016. This flies in the face of the tall claims of the builders in the city who keep on bragging that prices are rising. One should not believe in such claims. The customers can also ignore the artificial price increases the builders undertake from time to time to lure the innocent buyers and investors. As per the report, property prices in the Pink City are not appreciating, they are simply tanking. The builders would extol the economic virtues of buying at the bottom. But this doesn’t appear to be the right time to enter the market. Never catch a falling knife and put in your hard earned money. It will only hurt you.

For the past two years the builders have been parroting the buyers that the market has hit a bottom and there is no further scope for prices to decline. Speaking to Business Rankers, Nikhil Madan, dirtector, Mahima Group, said, “The quarterly reports often fail to capture the ground reality. In the past two years, prices have only increased even though marginally. But there are some builders who have reduced prices. There is a mushrooming of builders in the city and that has created a demand-supply mismatch. While the supply has shot up, the demand has not kept pace leading to pressure on prices,” said Madan.

Madan may be looking at the sector from the prisms of his own business, which according to him, is in pretty ship shape. But the macro reality is far from being comfortable.

The global economy is not doing well. Even though the domestic economy has stabilized, the high growth numbers appear to be out of sync with real economy.

“The sentiment among the buyers is poor because of global economic uncertainties. Project funding has also been a concern. The builders need to build projects in keeping with the needs of the buyers. The government also needs to do its bit to revive the market,” said Anurag Sharma, president of Credai.

Sharma is right in flagging the funding concerns of the industry. Saddled with bad loans, banks are not turning on the funding tap. Credit growth has been declining. That is also hobbling an industry like real estate.

Investors in the property market have left in droves factoring in the lack of price appreciation. Around two years back, they used to set the tone of this sector. But now it’s a deserted field with 15-20% investors remaining. Their share used to be 50-70% two years ago. Today, real end-users are the sole hope for the developers.

“Also the end-users are not entering the market in a hurry even though prices have fallen 20% in the last two years. They are thinking that prices will correct further. Many are sitting on the fences. The situation is likely to continue for at least for another year,” said a developer preferring anonymity.

The landscape doesn’t paint a pretty picture but many of the big builders are reluctant to reduce prices. There are large inventories idling beyond the city limits. An expert in the sector says that 70% of the capacity in these societies is lying vacant. “They are unlikely to be sold off soon. The present crisis will be more nasty and ugly. It has already claimed many victims. Small builders have been at the receiving end. But this is not the end. More bleeding is waiting to happen,” added the source.