Decline in sales hit real estate market in Orissa

Sales registrations in real-state sector are down by about 20 per cent in August 2011 compared to August 2010. Volatility in the market and hike in policy rates by Reserve Bank of India (RBI) have proved to be dampeners for intending buyers to invest in the sector.

Normally the real estate sales are down during the monsoon season due to slowdown in construction activities but the fall in sales has been particularly sharp this year. Due to volatility in the market and expectation of hike in home loan rate following increase in key policy rates by RBI, the buyers are undecided whether to invest at present or not, said Prafulla Dutta, Director Marketing, Alishan Realcon Pvt. Ltd, a city based real estate company.

Increase in the policy rates by RBI is a major concern for the buyers as investments in the sector are purely loan driven, he added.

Asked about the correction in property prices, Dutta said, if the market does not peak up before the coming festive season then we may think of price corrections. “But, right now we don’t have any such intentions”, he said.

Besides slide in sales registration, the real estate players fear about cancellation of bookings by many customers who apprehend further increase in home loan rates following frequent increase in key policy rates by RBI to tackle the inflationary pressures, said Samarendra Mohapatra, General Manager, Metro Builders (Orissa) Pvt. Ltd.

When it comes to investment, the people of Orissa are averse to take any risk and always want to play it safe. So given this investor sentiment and in the backdrop of the present turmoil in the market, rising inflation, rising interest rates and the global economic crisis, the people of the state may prefer to save money through some safe instruments instead of investing in real estate.

This may hit the real estate hard with prices of properties showing some downward trend in the future, said Jitendra Mohanty, Business Manager, Trustline Securities Limited, a brokerage firm.