Your Dream Home May Cost More

“ As realty sector buzzes with action, developers are hiking prices across housing segments – be they affordable housing, mid-segment or luxury apartments and villas. ”

Attachment

Share on            

Email Friend     Contact Author

(iRealtyWire.Org) – Are you looking for your very own house in NCR? If you are on the job for the last six-seven months or so, then you would have known that developers have hiked prices of their products across segments. There is increase of price in affordable segment, mid-segment and luxury segment. The reasons are varied but there is no denying the fact that as realty sector witnesses a flurry of activity from possible buyers and investors after a long lull, developers are increasing prices. While, Gurgaon is witnessing the maximum hike, the hike is not that sharp in Noida and Ghaziabad.

Real Estate Developers are hiking rates of their projects. According to the report, Gurgaon has seen up to 30% hike in prices in luxury segment – no other city of NCR has seen such a sharp hike in this segment. There is also a hike even in affordable sector too.

Can developers justify so much hike on their flats? “The greed of developers doesn’t seem to end. They should not hike prices of their products to such astronomical levels. They (developers) are building another bubble, which can be detrimental to Indian real estate. There is a demand and developers should be patient and increase prices gradually, which would build confidence in the longer term.”

Real Estate Market in important cities of the country has picked up in a major way, riding strongly on actual end user demand. Investors have also started trickling back in the market. Whenever demand exceeds supply, prices head northwards. This is simple market dynamics. Sikka, however, made it clear that if prices are artificially hiked without actual demand being present, the project sales will suffer considerably.

However, a senior official of Ansal API has a different take on this matter. According to him, there are two reasons for the price hike. During the period of economic slow down, companies had brought down prices, even below their cost prices in many projects in order to unwind their inventories and improve their cash flows. Companies were under pressure to pay their lenders, vendors as also to complete projects and hence came under pressure on one side, while the plunge in demand almost dried up their cash flows. Now that market conditions have improved, companies are only trying to recover their costs. He also says that one has to remember that developers have bought land at exorbitantly high prices when market was up, which has led to high prices of apartments.

NCR-based developers have increased prices by almost 25-30% in the last 9-10 months. Rajat Mahajan of Integrated Pan-Realty Solutions says that Noida has so far not seen this trend due to tough competition amongst new names entering real estate market. He also feels that another bubble in the market is in the offing as both end users and investors are back in the market. Projects in all ranges – affordable, mid-segment and luxury – are selling fast as there is a lot of speculative interest in the market. “I would advise investors and end users to invest in projects of reputed developers who have proven track record of delivery,” he concludes.

Market watchers are also concerned that even the so-called affordable homes are now costing more. They are becoming almost unaffordable. For instance, budget homes in Faridabad, Ghaziabad and Gurgaon have gone by 8%. An earlier report from Propertieshut.com claims that rates of affordable homes have seen 11.20% hike in Gurgaon, 9.70% in Faridabad and 4.90% in Ghaziabad respectively. However, rates have not changed in Noida, Greater Noida and Delhi.