The real estate market in Delhi and nearby areas has got used to high interest rates and rapid increases in land and related prices. Therefore, when certain areas of Noida, Gurgaon and Ghaziabad witnessed a decline in prices in this sector, the first reaction was that of disbelief. Indications suggest that we are witnessing a real estate sector bubble, which is evident in the unreasonable price inflation, which has resulted in higher vacancy rates and project delays. Investors, domestic and international alike, are steadily getting their money out of the market. All these signs point towards a possible slowdown.

The experts differ, however, over the prospects of a slowdown, since they believe that a correction of 10%-15% in real estate prices does not mean that the entire market is on its way down. At the same time, they agree that the focus is likely to shift towards smaller cities, with the metros showing signs of saturation. Developers brush aside the idea that the real estate market has been taken over by speculating investor activity. They believe that the market is still being controlled by genuine end user activity and the boom is due to the all round economic development of the country.

Builders are now targeting genuine homebuyers and plan to provide them with affordable housing. This way, they hope to avoid the slowdown, as the bubble situation generally develops when prices hit the roof thereby making properties beyond the reach of the genuine buyers. The realty market has gone through a similar situation in the past when the stock market bull run in 1993-1994 was replicated in the property market. When the stock market eventually crashed, the property market boom quickly vanished. Real estate players are cautious this time around and hope to avoid the crash by carefully balancing the demand supply situation.