The real estate industry may be showing signs of revival, but contrary to expectations, the festive season is not providing the much-needed boost, say real estate analysts. Buyer angst over escalating realty prices is threatening to create a lull in sales again, and with developers offering little or no discounts, the post-Diwali scenario is anything but certain.

While some developers are confident the market will stabilise, others feel a lot will depend on the infrastructural policies of the new state government. Said Pranay Vakil, chairman of Knight Frank global real estate consultants, “I don’t see prices coming down unless there are major policy changes, like the Forest Land Act, which will impact supply in a big way. I expect the market to stabilize post-Diwali for the simple reason that the government is planning a flurry of measures, like increasing the floor space index, to encourage affordable housing.”

The festive season, which starts with Navratri, is considered an auspicious time to purchase a house. This time, however, things are different. Baits like gold coins, holiday packages and waiver of stamp duty have disappeared from the developers’ radars. With home loans starting at 8%, developers are justifying their absence on grounds that the buyers are coming back as the market is picking up.

“Buyers were disinclined even when the prices had bottomed out. Apart from the fence-sitters who were waiting for prices to sink further, there was an added fear of job losses and the economic slowdown. That has now changed as the economy is doing well. It is human psychology that when prices start picking up, buyers come back into the market,” said Pravin Doshi, chairman of Acme Group and president of Maharashtra Chamber of Housing Industry. In the same breath however, Doshi voiced concern over the developers hiking prices too soon, too fast. “The high prices have made flats unaffordable. There should be a limit,” he said.

Brokers concur saying that sales have dropped in the past few weeks as resellers and developers have hiked rates by up to Rs2,000 per sq ft in the last few months.

For instance, Nahar Group at Chandivili, Powai, after selling about 600 flats for Rs5,250 per sq ft, has hiked the rate to Rs7,000-Rs 7,500. On Andheri-Kurla road, Raheja Constructions’s Silver Arch has hiked rates from Rs7,000 to Rs11,000 per sq ft.

“Buyers simply cannot afford these prices. I have lost many clients as the developers are refusing to negotiate,” said Arya Villiams, a partner in Asian Estate, a broking firm. “The developers seem to have forgotten their lesson from the meltdown and are again adopting a take-it-or-leave-it attitude. There is a lot of demand, but because the prices have shot up, sales have dropped,” said Rakesh Kapoor, a Thane-based broker.

Niranjan Hiranandani, managing director of Hiranandani Constructions, however, justifies the hike. Keeping an optimistic view, he said, “If I have two or three flats left to sell, a hike of 5-10% is justified. That said, I expect the prices to remain stable post-Diwali. The volume will increase as the demand is huge.”

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