Market mayhem now hits real estate prices

REALTY TROUBLE: Many feel that now money may stop flowing into purchase homes.

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Keywords: Real estate, property

Mumbai: The sharp fall in the stock markets over the past two weeks may set the ground for a correction in real estate prices.

Home sales and land transactions that had already slowed down over the last six months are expected to dry up further as real estate stocks were among the biggest losers in the market mayhem seen over the past 14 days. Most property stocks fell 25 per cent since the stock market correction set in on January 10.

Many now feel that with hefty gains being made by investors in stock markets being hit, money may just stop flowing into purchase homes.

“It’s not an FMCG good, so housing has a different pattern. It takes that much time for a price correction to be reflected in the markets,” explained National Direct Advisory Services spokesperson Gulam Zia.

“If you are expecting a correction in the next month, it’s not going to happen,” he stated.

On the other hand, developers say the pressure on investors to sell property to cover their loses is minimal.

“Twelve months ago, when price growth started slowing down, most investments went out of the market and end users came in. Today, investors who float money between the stock market and real estate are very few and (too) small a percentage to actually pull down realty prices,” Lodha Builders MD, Abhisheck Lodha pointed out.

While an immediate correction in property prices may not be on the cards unless the stock market sees a continuous fall over two months, property analysts are quick to add that the sentiment in the market has been hit.

Property demand had already weakened due to high prices and interest rates.

Now transactions are only likely to be put off further.