After remaining stagnant for well over a year, property prices are now witnessing a correction, witnessing a seven per cent fall from Rs 6,762 per sq. ft to Rs 6,260 per sq. ft in the January-March quarter, as reported by Mint.
The price corrections come in several forms, with some real estate developers having reduced their base prices and others now offering amenities like club memberships and modular kitchens as part of the package.
Low sales and piling inventory are the main reasons being cited for the decline in prices. At present, however, almost 6 lakh apartments across nine cities - Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai, still remain unsold.
The decline in prices has been accompanied with rising sales too, with 40,694 home units being sold in the quarter as opposed to the 37,555 in the previous one.
Apart from high prices, another factor causing the inventory pileup was the demand-supply mismatch, with most buyers looking for affordable housing and the supply comprising mostly of high-end luxury units. This has seen developers shift towards the mid-range segment which most new projects being launched falling under the affordable category.
Developers are especially focussing on apartments that can be subsidised under the Pradhan Mantri Awas Yojana (PMAY) to make them more attractive for home buyers. However, there is still the contention that they might have to reduce prices even further to clear the existing inventory.