Post by murphy51 on Aug 11, 2011 5:51:12 GMT -5
Is the dream run in continuously appreciating property prices likely to come to a halt? In Kerala Property developments are now witnessing a slowdown like never before. Real estate prices are now stagnating at particular levels in the prominent cities of Trivandrum, Kochi and Kozhikode. People who have witnessed the dream run in property prices are now unwilling to sell off their properties due to the slowdown in the market.
It needs to be noted that property prices in some parts of Kerala had gone up by more than 400 percent. When the government stepped in with certain restrictions, the property transactions fell by more than one third. In some places the property prices crashed by nearly one-fourth of its previous value. Speculative transactions have literally come to a halt. This trend is likely to continue until the recessionary trends in the global market are likely to witness an upturn.
Economists have attributed a host of related issues that has led to the current developments. The high interest rates charged by the lending institutions and banks are one reason. Due to the high interest rates, home loans had few takers and thus fewer transactions took place. Not only that, the cost of an apartment went up by more than double the cost prevailing in earlier times.
While on the one hand the cost of petroleum products has been reduced, on the other hand there is no percolating effect in the local economy. Thus, the high cost of building materials and other inputs is now shying away the leading builders from taking up big infrastructure and housing projects. Even the established builders are now finding it difficult to meet the day-to-day working costs and pay salary to the people working in the construction sites. Also there is a total freeze in new construction activities.
It needs to be noted that property prices in some parts of Kerala had gone up by more than 400 percent. When the government stepped in with certain restrictions, the property transactions fell by more than one third. In some places the property prices crashed by nearly one-fourth of its previous value. Speculative transactions have literally come to a halt. This trend is likely to continue until the recessionary trends in the global market are likely to witness an upturn.
Economists have attributed a host of related issues that has led to the current developments. The high interest rates charged by the lending institutions and banks are one reason. Due to the high interest rates, home loans had few takers and thus fewer transactions took place. Not only that, the cost of an apartment went up by more than double the cost prevailing in earlier times.
While on the one hand the cost of petroleum products has been reduced, on the other hand there is no percolating effect in the local economy. Thus, the high cost of building materials and other inputs is now shying away the leading builders from taking up big infrastructure and housing projects. Even the established builders are now finding it difficult to meet the day-to-day working costs and pay salary to the people working in the construction sites. Also there is a total freeze in new construction activities.