The outlook says the real estate sector is turning bearish, but there is an argument between developers and real estate analysts that is becoming louder.
The issue is over whether the city and its periphery is observing a price correction in the residential sector.
Real estate analysts maintain that the prices have started softening (varying from area to area) in both city and its periphery, but developers rue that rising input costs was making it impossible to bring the prices downwards for the new projects (in the periphery).
Developers admit that prices have softened in urban areas like Chandigarh, Panchkula (where mostly secondary sales happen), but they refuse to believe that the prices would come down in the periphery. Reason: the prices are "rational" in the peripheries of Chandigarh, besides in Mohali and Panchkula.
Amit Jain from Premium Acres, who is into construction of residential projects, maintains that transactions in secondary markets already have started correcting especially in urban markets.
"Prices have started coming to rational level; you can observe it from the transactions. For, a property in Chandigarh, which were earlier quoted at Rs 11 crore, prices have come down to Rs 8.5 crore. This reflects secondary sales are observing correction."
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Bharat Mittal, director of Sushma Buildtech Limited, another region-based infrastructure company, maintain that prices in the urban market have started correcting. "They are now reaching the rational level."
A real estate expert in the region, who has been working with some of the developers in the region, said correction was bound to happen. "Since the secondary market is feeling the jitters now, the pressure will pass on to primary market as well," he maintained.
Developers, worried over piling debts, would now try to incentivise customers in order to sell the existing lots. Region-based infrastructure company Sushma Buildtech, which recently launched a new residential project Sushma Elite Cross, has launched a scheme that allows the customer to book a flat without making down payment.
Rahul Mehta, Executive Director (North), DLF, maintained rising cost of borrowing moving up in the last few months (owing to RBI measures to douse inflation) impacts the borrowing costs for individuals, especially the salaried people who form the bulk of buyers for residential property in the region. "Obviously this has slowdown the pace of transactions," he added.
A downward pricing for new projects was a difficult proposition for developers, he said. Given, the higher land costs as well as increasing input costs, "value pricing will certainly happen," he added.