Global economic recession and the slowdown has affected almost all countries. Major American, European and Japanese companies
are facing severe crisis of liquidity and credit. Indian recent economic success largely attributed to export of IT services
and textile goods to these developed economies of the west also sufferred due to the credit crisis.

However, due to India's slow and cautious approach towards reforms has saved it from possibly disastrous implications.
but the reality is the Indian economy depending on world trade is also facing the slowdown.

Effect of recession on real estate industry

The booming real estate industry which contributes to second largest employment in India is also facing the reality of slow down in IT
and export industries. The demand has slowly but gradually reduced and there is more than 25% price fall in many areas.
the trend appears to be still continuing till it will not recover the effects of this financial crisis.

When the recession will end
It is still naive to guess when exactly the current recession would end.
We have various estimates ranging from end of 2009 to middle 2010  but it must be clearly realised
that there is no scientific basis for such estimates.


Whats the future?
The adverse expectations have hit the real estate sector the most. The govt is pumping money into the system, the prices of essential commodities
is increasing but still the monetary measures taken by the govt is not succeeding.

The reasons may be the banking sector has still not reduced interest rates sufficiently to people expected values and match the return on investment
in real estate.The current bank rates are still around 10-11% on a long-term housing loan, this should come down to around 6-7% to attract new customers.
Second, as the RBI periodically announces measures to reduce interest rates this fuels expectations of further cuts and discourages investment in all fixed assets including real estate.
Third, developers are obviously caught in the speculation trap having mopped up most of their own properties
in the past on the assumption of a gain in the future.
While they have so far expected the government to bail them out, this is unlikely to happen and one can expect substantial property price reductions in the next one year.

The bottom line. The real estate sector has so far relied mainly on upper income domestic demand and external demand.
This is unlikely to revive in the near future.
For the common mass domestic market the Indian dream of owning one’s own home is unlikely to be realised at current level of prices.
Only a combination of much lower home loan rates and a significant drop in prices can energise the real estate market on a sustainable basis.