With the real estate market witnessing a gradual slowdown since last six months in Ahmedabad, the trend seems to be finally taking a toll on property prices.
According to industry experts, while a 10 per cent correction has already set in among residential properties, in the next couple of months it could go upto as high as 20 per cent in Ahmedabad.
The slowdown in property bookings is being attributed to factors like artificial hike in property prices, hike in home loan rates and more supply of high end properties.
"These factors have resulted in heavy recession in the real estate market in Ahmedabad, especially in residential properties. This has resulted in correction in few products while more is expected in the next few months," says NK Patel, director of Real Estate Studies and Management Academy (RESMA), Ahmedabad.
As per experts, since January, real estate brokerage firms in Ahmedabad have seen a slump in business by about 30 per cent. Property bookings have also been on a downhill since couple of quarters now. Real estate consulting firm, Jones Lang LaSalle (JLL) India states that the downgrading of US economy has also played a part in aggravating negative sentiments among buyers.
"Buyers are also getting pensive over the recessionary trends, apart from inflation taking a toll on their purchasing power," says Nirav Kothary, regional director, JLL India
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Among real estate developers, cash crunch has also been troubling issue since last six months. "Money has not been rotating among developers. This has resulted in developers being forced to offer discounts, leading to 5-10 per cent correction. If this continues, the rate of correction in property prices could go up further," says Hitesh Shah, chief executive officer - residential properties, Space Management, an Ahmedabad-based real estate consulting firm.
Meanwhile, the US recession has at least hit the NRIs that have been one of the regular investors in Ahmedabad realty market, says Patel. "Investors, especially NRIs, have also gradually slowed down on bookings, bringing the numbers down considerably. The trend is similar among users as well who had been postponing buying in the hope of correction," adds Patel.