Automobile engineer Rajesh Shinde has been delaying his decision to invest in real estate for the last four years. Shinde, who is eligible for a home loan of around Rs 60 lakh, says that his hesitation stems from what he calls the unscientific price inflation in the market. “There seems to be a trust deficit between the buyer and the seller. Properties which I want to invest in are exorbitantly priced and the ones which are in my range are simply bad. I am hoping for a price correction in the market before I settle in to buy my own house,” he said.

Pune’s real estate market over the past few years has been witnessing a steady slowdown. The market, which normally sees absorption of around 20,000-22,000 units every six months, has been witnessing absorption of lesser than 15,000 units on a half-yearly basis. While realtors blame the wait-and-watch policy of buyers and the global slowdown for the trend, buyers on the other hand blame artificial inflation in the market for deferring their investments.

Most new launches are concentrated in the newly developed and fringe areas of the city such as Yavat, Pirangut, Susgaon, Lavale, Moshi, Chakan, Hinjewadi and Dehu Road. Announcement of the Pune Metropolitan Regional Development Authority (PMRDA) had propelled the same, but when it comes to absorption of the projects, the figures paint a sorry picture.

One of the major reasons for the unsold inventory and subsequent stress in the market according to Ritesh Oswal, managing director of Cephus Buildcon, is the government’s failure to provide proper infrastructure in the developing areas. “While real estate growth has indeed occurred in fringe areas, basic infrastructure like roads and public transport have failed to keep up. Their absence has made the areas unliveable and the buyer will not get the benefit of price,” he said.

Another issue which Oswal pointed out is the lack of clarity about the development plan. “Many buyers are holding on as they hope that prices will go down once the government announces increased Floor Space Index (FSI) in the fringe areas. Lack of clarity in the matter is a serious hindrance to the market,” he said.

Rohan Pate,director of Amit Enterprises said that the rise in unsold inventory is a combination of both global and local issues. He explained that while the downturn of the global economy is responsible for many buyers holding back, closer home, the mushrooming of realtors and market complexities are responsible for the apparent rise in unsold inventory. “Any one with access of land ventures into the real estate industry and try to juggle their activities through the booking amount. But such operators are not able to sustain their activities for long, giving rise to unsold inventory in the trade,” he said. Pate claimed that most unsold inventory are from under-construction sites which are in financial difficulty.

For buyers like Shinde, the supposed over-inflation of the market is a major cause of holding back. Property watcher Ravi Karandeekar also said that in case of working professionals, the quality of life that is being offered in the areas, is a major reason for them to refrain from investing there.

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