A 30 per cent drop in prices needed to spur realty sector growth: Goldman

24 November 2008

A minimum 30 per cent drop in prices will be required to spur the Indian real estate market back into action, according to global financial services major Goldman Sachs.

And this may not be accomplished without a drop in home loan rates as well, the firm said in a report on Indian real estate.

''Our India Real Estate Team believes that prices may have to fall by up to 30 per cent in some geographies for affordability to catch up,'' Goldman Sachs said in its report.

The report by the global financial institution comes close on the heels of statements issued by finance minister, Mr P Chidambaram asking industry to reduce prices in order to boost consumer demand.

The ruling prices, at least in the suburbs of Mumbai and Bangalore, are so high that they have to decline by up to 30 per cent to boost demand, Goldman Sachs pointed out.

''Although prices over the past three years have gone up in line with other economies globally, they have not corrected substantially, unlike its global peers,'' Goldman Sachs said.