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MOST Indian households have been asking the same question for a while now: When will property prices fall?
The good news is that the correction has started and it will only be a few more months before the results show.
wealth interviewed Ghulam Zia, National Director Research & Advisory Services, Knight Frank (India) Pvt Ltd, who says it's best to wait for one year before buying a home.
Why has there been a dip in the property rates recently?
Unaffordable property prices, high mortgage rates, and uncertainty in employment conditions due to global economic meltdown has affected the demand in a big way. The buying and selling of properties have gone down by over 80 per cent. Thus putting pressure on the prices. And, that's why the rates are falling.
Is this trend likely to continue?
Yes, the prices haven't bottomed out yet. The buyers may not immediately get into the property market and hence the prices are still to come down.
By how much will the rates drop in the next 6 to 8 months?
We estimate a correction of 35 to 40 per cent on property rates that have peaked.
How long will it take for the rates to stabilise?
Approximately, it would take a year or a year and a half for the rates to stabilise.
Is this a good time to buy a house?
Wait for at least a year for the prices to stabilise.
Should you consider buying a house for investment?
With real estate prices falling, short-term investment in real estate can be avoided. However, if you have a long-term horizon in mind, you may still find good deals to invest in.
If you plan to occupy the house, I would suggest focusing on rental premises for a year, and then look out for a good deal for outright purchase.
Photograph: Bill Pugliano/Getty Images
Tool: Find out how property rates have fared in your city!
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