Home | Blogs
Residential Projects in India Dropped by 25%
Jul 21, 2008

A decline of about 25% is witnessed in residential projects in Indian housing sector due to a fall of nearly 15 to 20% in volume transactions of prime markets, says RBI.

The data released from the RBI (Reserve Bank of India) revealed that residential projects in housing sector of India recorded a drop of about 25% as projects in main markets like Bangalore, Lucknow, Amritsar, Chandigarh and Delhi/NCR witnessed a fall of nearly 15-20% in volume transactions from August 2007 to April 2008, as reported by

According to RBI, the bank credit in housing sector grew from nearly Rs. 2, 24,758 Crore (US$ 52 Billion) to about Rs. 2, 51,668 Crore (US$ 58.6 Billion), a rise of only 11% in comparison to growth in bank credit of 38.31% in fiscal 2006 and 24.72% in fiscal 2007 respectively.

The high prices of property are considered as the major reason behind the decline in residential projects in Indian housing sector. Also, rise in prices of cement and steel, high charges by real estate developers and rise in demand for industrial land are identified as causes for rise in prices of property in metro cities of the country. The property prices are also escalating in mid-town locations due to the scarcity of upscale property, leading to rise in demand for property in residential projects.

Moreover, due to economic slowdown and subprime crisis in the US, new residential projects and already announced projects are unable to get adequate number of buyers.

Further, due to scarcity of buyers for already built flats, investors are not interested in investing money in new residential projects. The builders are trying to get manufacturing cost for prepared flats but unable to get this much as people are waiting for fall in prices.

However, due to continuous drop in residential projects in housing sector, RBI decreased its rate of interest on home loans and real estate firms decreased prices of houses.

A Research Analyst at
RNCOS said, “The Indian housing sector registered sharp growth in past few years but currently, a slight decline is being witnessed in sales of residential property. In near future, a rise is expected as various banks are providing home loans at a lower rate of interest with improved finance services.”

Related Market Research Reports:
Opportunities in Indian Housing Sector (2006-2007)