TNN
Bangalore, Dec 12 (mb): If you are planning to buy a house, perhaps now is the time to do so. After three years of unprecedented growth between 2003 and 2006, property prices across much of Bangalore are now falling. And falling sharply in many areas.
A survey by real estate consultancy Asipac finds that residential prices in south east Bangalore (around Sarjapur Road) have dropped 10-20% in the past one year - with prices now in the range of Rs 3,600-4,600 per sqft against Rs 4,000-5,300 a year ago.
South Bangalore including Jayanagar and J P Nagar (except Koramangala) prices are seen to have dropped 8-15%. East Bangalore, which was the first to see corrections, as TOI reported earlier, is estimated by Asipac to have witnessed a further price drop of 6-12% in 2007.
The city centre and parts of North Bangalore (especially between Hebbal and Yelahanka) are the only areas seen to be still holding up, the former because of lack of fresh supply of property, and the latter because of the proximity to the upcoming airport.
"In many cases, the quoted prices may be higher, but developers are throwing in a lot of freebies that effectively bring the price down," says Asipac chairman Amit Bagaria.
The price drop is the result of the enormous gap between demand and supply. Average sale volumes are seen to be down 10-40%.
"Developers who were selling 60 flats in a quarter a year ago are today selling barely 6," says Mayank Saksena, VP in property consultancy Jones Lang LaSalle Meghraj.
Asipac estimates that against a total sale of about 33,500 homes by the entire organized sector in 2006, this year will end with a sale of no more than 26,000 homes. At the same time, the number of properties under construction has increased manifold.
Irfan Razack, CMD of the Prestige Group, admits property prices in the city’s peripheral areas are at an "all-time unrealistic high".
Geetha Naresh, a property consultant, says investors who had blocked their money on prime properties in Whitefield and Marathahalli two years ago paying between Rs 1,600 and Rs 2,000 per sqft are today willing to sell at the same price.
"There are instances where investors are even willing to sell below their purchase price, at rates like Rs 1,500 per sqft," she says.
Many speculators and investors had entered the market in 2005 and 2006, booking multiple flats, thinking they would be able to dispose them of once prices reached a certain higher level.
"They only paid the initial amounts and they did not have the capacity to pay the full amount. But now they are all stuck. Neither can they pay the instalments nor can they sell the flat because of poor demand. And since they have to pay off bank loans, there is large-scale distress sales happening," says an analyst.