Monday, December 22, 2008

The real estate sector has to get real about the changed market environment, doing itself, consumers and the economy a favor

Real estate is one boom-gone-bust that's proving hard to tackle.

Realtors must accept that their big margin-driven boom-time is over for now. Much of their woes are their own doing. They overbuilt assets, riding on a bubble.

With depressed demand, they continued to expect unrealistic profit margins. And now they're resisting top-end price corrections.

Inflated asset prices are such that even the moneyed are sweating over purchases in tier-I and tier-II cities.

Shifting gear from luxury and high-end to mid-level and affordable housing is required.

Demand for low-cost housing is massively unmet; the potential for investment here goes beyond the context of today's economic downturn.

India's young demographic profile, rapid urbanization and high savings rate can keep propping up the property market.

But housing prices in some segments need to fall by as much as 30 per cent to match affordability.

The health of real estate has strong macroeconomic multiplier effects, both in terms of contribution to GDP and employment generation.

The more the sector is stimulated, the faster India's economic turnaround will be.

The real estate sector has to get real about the changed market environment, doing itself, consumers and the economy a favor.
To read more, please, visit - The Times of India

1 comment:

  1. Dear Ravi,

    This is the pulse. A real pulse of Real Estate in India. This article is a real story of prospective buyers like me.

    We have dreams and we want to buy flat in Pune, but we do not want to get into Credit Bubble that US is experiencing today. If we can buy a flat without taking loan, we will buy ELSE NOT. This is called Affordability.

    Affordability, by any vocabularity, does not mean buying capacity after taking loan. Affordability means the buying power without creating any debt.

    We are not interested in creating an asset whose future is not secured by creating a sure liability in present.

    ReplyDelete