Real estate developers will need to cut prices sharply in the second half of the financial year to convert demand into actual sales, as potential buyers continue to wait on the sidelines, industry watchers say.

Small developers at a residential property exhibition in Mumbai last week offered customers up to 15 percent discounts, waivers in registration fees or stamp duty and free parking spaces, but they failed to excite buyers, analysts said.

Cash discounts still didn’t change their minds, they added.

“With the writing on the wall pretty clear, developers are likely to be forced to reduce prices further and offer higher discounts to clear existing inventory and to rev up pent-up demand in the sector,” BNP Paribas said in a note this week.

“We believe the sector fundamentals remain weak with both pricing and volumes under threat,” it added.

While developers are hopeful of strong demand during the next two weeks to Diwali, the biggest Hindu festival, when demand is at its peak, they acknowledge volume sales will not be as high as previous years and a price correction is on the cards.

“There has been a reduction in volumes compared to last year but prices are still holding,” Sarang Wadhawan, managing director of realtor Housing Development and Infrastructure Ltd, which hasn’t reduced prices yet.

“But if demand doesn’t pick up (after Diwali) then we will definitely rethink our strategy.”

So far, in the first half of the year, real estate purchases have dropped by nearly a fifth as interest rates on home loans rose and double-digit inflation deterred residential buyers, industry officials said.

“Only if values reduce between 15-20 percent across the entire spectrum of the Mumbai market, then we will see a revival of the volumes,” Pujit Aggarwal, head of city-based developer Orbit Corp told Reuters.

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