MUMBAI: Real estate developers in Mumbai and Delhi are staring at a piling inventory, made worse by unaffordable prices leaving very few takers for new launches. “The real estate market is currently sluggish, and there’s very clearly an overhang of inventory,” says Anuj Puri, chairman and country head, JLL India.Faced with such a situation, developers aren’t even trying to increase prices. “With absorption rate at a new low, builders are trying to get their volume back,” says Samantak Das, chief economist and director, research, Knight Frank India. Price stagnation is perhaps the first sign of a bear market in real estate. “Prices remaining flat for the past two years is an indication of time correction,” says Sharad Mittal, director and head, real estate investment, Motilal Oswal Real Estate. This is significant because the money could have earned better returns from other investments.Once investors realise this and begin to offload their stock, the ‘price correction’ starts. This was evident in Delhi when investors tried to exit by offering discount to the market price. “Price correction in the Delhi NCR in the past two years was 15-20%,” says Anil Kothuri, president and head, Edelweiss Housing Finance & Credit.The picture isn’t any different in Mumbai either. “The current supply is significantly higher than demand. The only place where there is some demand left is in pre-leased commercial properties,” says Feroze Azeez, executive director and head, investment products, Anand Rathi Private Wealth Management.” Buyers are still waiting for a fall in interest rate and a correction in real estate price,” Das explains. But after holding on for two years without hardly anything happening, investors and builders have lost patience, and are even offering small discounts to move their holdings. “Developers are not cutting rack rates, but are offering good discounts in the form of freebies like flash sales, attractive payment plans, free parking, free stamp duty and registration, low interest of loan, etc.They are also offering big price discounts to bulk buyers,” Mittal adds. Discounts largely depend on the type of property and area. “In large deals, due to economies of scale, builders are giving a discount of 15-20% for under-construction properties. However, the discount is small (5-10%) in the ready possession secondary market,” says Azeez. This difference is visible in area wise too. “With no large supply, there’s not much pricing pressure in the western suburbs. However, price pressure is more evident in central Mumbai, especially in Worli and Parel areas,” says Kothuri.Another question that’s crossing the mind is how long will this trend continue? For, unlike a stock market, real estate consolidation can take very long and may last around five years, says Azeez. “The new development rules by the Maharashtra government, once enacted, should add a lot of supply to the market. So, the consolidation may last till real estate prices become affordable once again,” says Mittal.The Mumbai real estate market had seen a very big correction between 1995 and 2001, when prices crashed by half in many pockets. And if one takes into account the high inflation during the period, the correction works out to around 75% in some cases.So, are we heading for a similar situation? Most experts don’t think so. “A price correction of the magnitude that was seen during 1995-2001 may not happen this time,” says Puri. This is because most factors — high inflation, high interest rates, slowing economic activity, etc, — are much better now than they were in that period. Also, investors use the portfolio approach to switch from real estate to other asset classes (like equity and debt) because they are doing well now. So, what should one do now? It depends on whether you are in the market to buy or sell. “Sellers shouldn't bother too much about the 5-10% discount, and let their property go. This loss can be recouped in a year’s time from safe instruments like bank FD. Else, they may be forced to hold on to their property for another 4-5 years to get the same price,” says Azeez.Buyers can be broadly classified into two categories — investors and end users. Since the correction is expected for a few more years, investors should not enter now. “The correction has just started and there is no panic selling in the market yet. So buyers, who are buying a property for investment, should defer it by 1-2 years,” Azeez explains. However, end users are restricted by several other factors like marriage, birth of kids, getting a better job, etc, and therefore it may be difficult for them to postpone the decision. However, they should also note that this is a buyers’ market and therefore, have to bargain hard.