Is a property price correction possible in 2017?

A vast majority of home buyers (as many as 74%), dismiss the possibility that recent policy changes, could lead to price corrections in the housing market. In fact, prospective buyers and sellers across the country, seem convinced that wishing for cheaper houses in 2017, would be fancy and wishful thinking, finds a survey by Track2Realty in ten cities – Delhi-NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, Ahmedabad, Lucknow, Coimbatore and Hyderabad.

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This is quite striking, as more Indians now dismiss expectations of price corrections, as compared to 2012, when 70% home buyers had refused to believe that prices would correct, at a time when there was a lack of policy changes, legislations and transparency.

“I feel that there is an organised cartel, spreading the news that property prices would correct, to keep the end-users away from the market. With more stringent laws, there will be less supply in the housing market and hence, property prices will only rise in 2017,” says Navneet Sharma, a home buyer in Noida.

Key findings of the survey

74% of the home buyers, dismiss the theory that recent policy changes will lead to price corrections in the housing market.
78% of home buyers who invested in second homes and are planning to sell this year, have been assured of higher returns by dealers and brokers, if they exit in 2017.
78% believe that if they miss an opportunity to buy now, they may never be able to buy a home.
68% repent investing in other instruments and wish they could have put the same money in property.
58% are not sure whether price corrections, would ever happen in the Indian property market.
94% don’t find media reports on the property market reliable.
68% of the respondents conducted a physical verification of the locality and the property, while 20% hire a reliable broker and the remaining 12% go by references of friends and family.
90% believe that even property search sites are biased, in their valuation of the property.
96% Indians believe that the market is and will continue to be a sellers’ market.
74% buyers believe that the benefits of distress sales do not reach the end-users, owing to the investors and speculators operating in the market.

For the survey, 2,000 prospective buyers and sellers were interviewed. The property quest was put into three categories — seeking property up to the price range of Rs 50 lakhs, seeking a house up to the range of Rs 1 crore and those seeking luxury houses of Rs 1 crore and above. Interestingly, the results were common across the three segments.

Pricing trends in 2017 that home buyers expect

A majority of the home seekers (74%) are convinced that they will have to shell out more money to buy a house in 2017, as compared to the last few years. An equally high number (78%), who invested in a second house and are planning to sell this year, have been assured by their dealers and brokers of higher returns, if they exit in 2017.

In most of the cities, home seekers feel that prices are only going to increase, based on the experience from their property search. 78% believe that if they miss an opportunity now, they may never be able to buy. 68% repent investing in other instruments and wished that they had put the same money in buying a house.

Nearly six out of 10 home buyers (58%), are not sure whether price corrections would ever happen in the Indian property market.

Nearly four in five (76%), who went on a house hunt in the last three years, are disillusioned with the affordable houses advertised in the newspapers.

Home buyers remain disillusioned with market reports

Almost all the buyers (94%) do not find media reports on the property market reliable. “There is no point in trusting media reports, as different organisations report different prices for the same locality. When my local property dealer takes me for a ride, if I don’t cross check his advice with another one, how can I trust the one-way communication of the media,” questions Gautam Patel in Ahmedabad.

No less than 90%, believe that the valuations given by property search sites are far from ground realities. “Why are property price listings on different newspapers and portals different, in the same locality? They are supposed to be based on the basic selling price of the developers,” questions Amrit Mohan, a home buyer in Thane.

Nearly seven out of 10 (68%) buyers conduct a physical search and verification of the locality and the property, while 20% hire a reliable broker and the remaining 12% opt for references from friends and family.

A whopping 96% of the respondents, believe that the market is and will continue to be a sellers’ market. 74% feel that the benefits of even distress sales, do not reach the end-users, as there are numerous investors and speculators still operating in the market.

(The writer is CEO, Track2Realty)

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Ravi Sinha

Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.

Twitter: https://twitter.com/ravitrack2media