Increasing interest rates are likely to see customers defer purchases. Real estate prices in parts of Delhi and Mumbai may correct 10-15 per cent in the next few months, as rising interest rates could see customers defer their buying decisions, according to builders and real estate experts in these cities. Mr Rajesh Goyal, chairman, RG Group, a Noida-based builder, anticipates home prices in Delhi to correct 15-20 per cent in the next few months. Prices have gone up 40-50 per cent in the last 7-8 months. "When prices increase, people start deferring," he said. Mr Goyal says that though land prices have doubled in many areas in Delhi from Rs 1-1.5 lakh a metre to Rs 2.5-3 lakh a metre, there are hardly any transactions at these prices. In Mumbai, where primary sales have dried up, the situation is more acute, say experts. “Sales have gone down,” said Mr Pankaj Kapoor, CEO, Liases Foras, a non-brokerage real estate research firm. "In the last 3-4 quarters, builders indulged in artificial sales by transferring the ownership of 300-400 flats to investors, brokers or underwriters. We flag such projects," he said.
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