'Premium housing prices may fall soon on inventory pile-up'

Nov 01 2013, 21:07 IST
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Financial advisory firms say investors can anticipate premium housing units to get cheaper by up to 20% and gold prices rising significantly this festive season. (Reuters) Financial advisory firms say investors can anticipate premium housing units to get cheaper by up to 20% and gold prices rising significantly this festive season. (Reuters)
SummaryInvestors can look forward to premium housing units to get cheaper by up to 20 per cent

Investors can look forward to premium housing units getting cheaper by up to 20 per cent and gold prices rising significantly this festive season, says a financial advisory firm.

“We are expecting premium housing projects to get cheaper by up to 20 per cent... Potential buyers will not have to negotiate discounts, since realty companies are in all probability going to make such announcements,” a Delhi-based financial advisory firm InvestCare said in a statement.

The high inventories can soon impact cash-flow for realtors, adding that depending on the project, a cut up to 20 per cent could be possible.

“A cut in prices is definitely possible for premium housing units. If companies can cut prices, it will help bring back buyers to the market despite the weak environment”, its Managing Director Ajit Mishra said.

Company's director Samar Vijay said sales of premium housing units have fallen sharply and companies are sitting on huge inventories. Since premium units fetch huge margins to builders they can afford to offer discounts to get rid of the inventories, he adds.

The situation is very different from mass market units, he said, adding since builders have a lot more financial muscle they can hold on to the prevailing high prices. They are open to negotiated deals with potential buyers, which can help cut down price for the buyer, InvestCare said.

On gold prices, it said, “Gold prices could inch up after the compromise announced on the US government shutdown and the continuing uncertainty there. In the event of the debt ceiling being raised, the US Fed will have to print more dollars, pushing gold prices up further.”

"Since the US debt is rising and is likely to tread up further, we are confident that gold prices will go up substantially from current levels to around Rs 35,000 mark," he added.

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