Increase in prices sours revival in demand for real estate

Any resurgence would be hit harder by prices rising excessively, than by loan costs

The much-heralded revival in home-building could come to nothing as property developers may have raised prices too much too soon, data from realty research company Liases Foras shows.

The country’s largest mortgage lender has a word of caution for real estate companies looking to cash in on the increase in demand.

Liases Foras founder and managing director Pankaj Kapoor says builders have raised prices to push up their valuations in the run-up to raising money.

“Developers have to be careful about prices, otherwise they will erode the long-term benefits for short-term gains,” said Renu Sud Karnad, joint managing director of Housing Development Finance Corp. Ltd (HDFC).

Any resurgence would be hit harder by prices rising excessively, than by loan costs.

“The effects of higher prices are more on demand than higher interest rates,” Karnad said at the launch of the Liases Foras Real Estate Sensitive Index.

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Liases Foras launches RESSEX

Realty research firm Liases Foras launched its Real Estate Sensitivity Index – RESSEX,( www.ressex.com ) that will provide structured data and property analysis on the country's real estate market. To read more, please, visit Ravi Karandeekar's Pune Real Estate Investment Blog

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