The Indian real estate market, especially in Bengalur, is slowing in the grip. According to a recent Reddit post, however, this is not a bubble waiting for a rupture, like fear.
Concerns about real estate accidents are largely unfounded because market dynamics do not show speculative bubble characteristics, says the post.
Understanding the “bubble”
Real estate bubble usually includes uncontrolled loans, inflated property values and sudden collapse when debtors cannot repay their loans. This was the case during the US subprime crisis, where excessive loans led to an increase in the artificial price, which eventually hit the market. However, the current slowdown in India does not result from unscrupulous credit practices or a widespread financial crisis between banks and developers.
Concomitant slowdowns in the Indian real estate sector can be attributed to various factors, including the developing labor market and progress in artificial intelligence (AI). “The slowdown is probably due to factors such as progress AI and the labor market instability,” Reddit said. Economic uncertainty, increasing interest rates and shift in buyers' sentiment could also contribute to the reduced rate of growth.
Smaller correction vs. bust
Although some market correction can be expected, it is unlikely to lead to drastic collapse. “In the worst case scenario, we could see smaller corrections with prices slowly in the next few years, but this will not lead to a market breast,” he explained. Unlike the US crisis in the area of housing, the Indian market was not strongly used and banks maintained cautious credit practices.
Nevertheless, the post guarantees warning. A possible exception from the outlook, says the redditor, would be the financial fall of the main real estate developers. “The only exception would be if 1-2 main real estate players went bankrupt,” he pointed out. However, many developers, such as Prestige, continue to carry out extensive projects without significant financial anxiety.
While the Indian real estate sector records slowing, it is far from in a bubble that is on the verge of rupture. “In order to cause a major impact on the real estate market, more severe disturbances would be needed,” Reddit concluded. Meanwhile, the market remains stable and only a gradual correction is expected in the near future.
The post caused a discussion about Reddit with some users, even saying they did not see the slowdown. “I don't even see the slowdown around me. The brokers still quote excessive prices,” the user said.
Another shared user: “Service sector represents more than 50 % of GDP, even several % decrease could affect markets with Bangalore real estate.
One user shared that the Indian state of Reale never “threatened” because inflation pressures do not affect rich people in the same way as poor and middle class “. A larger share of the initial property and will be closer to the introduction of the monopoly, ”the user explained.
