Property Prices Remain Stable Despite Slower Sales: Implications for Real Estate Investors

India's housing market is showing signs of a slowdown in sales momentum, particularly in the luxury segment, but property prices have largely remained resilient. According to Ravi Sinha, CEO of Track2Realty, the disconnect between slowing sales and stable prices is creating a complex environment for real estate investors.

Speaking on Zee Business, Sinha argued that the strong demand narrative around luxury housing may not fully reflect genuine end-user demand. Instead, he said a significant portion of luxury housing purchases in recent years has been driven by investors looking to park capital.

According to Sinha, developers and other real-estate stakeholders have for years justified their growing focus on luxury housing by arguing that affordable housing is neither commercially viable nor supported by sufficient demand. As a result, affordable housing has steadily lost share in the market while luxury projects have dominated new launches and sales.

However, Sinha questioned whether the apparent strength in luxury housing demand was truly end-user driven. He argued that the first question investors should ask is where the demand is actually coming from.

“Those who wanted to park money in luxury housing have already done so,” Sinha said, adding that the segment may have reached a plateau. According to him, much of the demand that fuelled the luxury boom came from investors seeking a place to deploy capital rather than from households purchasing homes for self-occupation.

He pointed to practices such as “first transfer free” offers and restrictions on resale during the initial years of ownership as signs that developers are attempting to manage speculative activity and protect inventory sales.

According to Sinha, such offers make little sense for genuine end-user buyers because developers eventually complete projects, hand them over, and exit, leaving management to resident welfare associations or apartment owners' associations. In such situations, the concept of a “first transfer free” offer has limited relevance to an owner planning to occupy the property.

He also pointed to clauses restricting transfers for up to two years after booking. While developers often explain such restrictions as measures to prevent speculative trading, Sinha argued that they may also reflect concerns that investors who purchased inventory for short-term gains could seek early exits.

If large numbers of investors attempt to sell booked units after earning modest profits, he said, developers may struggle to sell their remaining inventory at desired prices.

“The luxury housing market has entered a situation where developers, traders, and investors are all tied to the same cycle,” he said.

According to Sinha, developers are trapped because they depend on investor-driven demand, while investors are trapped because liquidity and exit opportunities may become increasingly difficult if fresh demand weakens. He described the situation as a “lock jam” in which every participant is dependent on the continuation of the same demand cycle.

He argued that a market driven primarily by capital parking cannot indefinitely sustain India's broader housing sector. “Can India's real estate market continue to be driven solely by money being parked in luxury housing?” he asked.

Despite concerns about weakening demand, Sinha said investors should not expect an outright property price crash similar to what was seen in the United States during the 2008 financial crisis or in Japan after its asset bubble burst.

According to him, real estate corrections do not always take the form of sharp price declines. Instead, India has historically experienced what he described as “time correction.”

“If a property purchased five years ago for Rs 2 crore is still worth Rs 2 crore today, while inflation and other asset classes have risen significantly, that itself represents a loss in real terms,” Sinha explained.

He noted that gold has nearly doubled in value during recent years, illustrating how a flat property price can still represent a meaningful erosion of wealth when measured against inflation and alternative investments.

According to Sinha, many market participants misunderstand the concept of a real-estate correction because they focus only on visible price declines. He argued that a correction can occur even when headline prices remain unchanged.

He also noted that developers often adjust pricing indirectly rather than cutting headline prices. Discounts on premiums, negotiable charges, extended payment timelines, and other incentives can effectively reduce transaction costs without lowering advertised base selling prices.

According to Sinha, the advertised market price is typically the BSP (Base Selling Price), while many other components of the final transaction are negotiated privately across the table. Premiums, PLC charges, and other costs can often be adjusted without changing the headline price quoted to the market.

He argued that developers across the country are already engaging in forms of effective price correction by reducing premiums, offering incentives, extending payment deadlines, and restructuring instalment schedules for buyers facing financial pressure. In his view, these measures amount to a form of price correction even when official selling prices remain unchanged.

Sinha said the luxury housing market has become increasingly dependent on investor-driven demand. While this helped fuel strong sales in recent years, he cautioned that such demand alone may not be enough to sustain long-term growth.

According to him, some developers are concerned that investors who purchased units for short-term gains could attempt to exit projects, potentially affecting future sales momentum. This has led some developers to impose restrictions on transfers during the initial years after booking.

He described the luxury market as being caught in a “lock jam” where developers, investors, and speculative buyers are all closely tied to the same demand cycle.

According to Sinha, the segment has reached a point where capital-parking demand alone cannot sustain the broader housing market. He argued that the industry has become increasingly dependent on investors rather than genuine homebuyers and that this creates vulnerabilities when fresh investment demand begins to slow.

Even as market conditions become more challenging, large listed developers continue to report strong sales and maintain healthy balance sheets.

Sinha attributed this partly to their strategy of expanding into high-ticket-size markets such as Mumbai and the National Capital Region (NCR). Higher-value transactions help support reported sales figures and strengthen balance sheets, he said.

He also argued that developers are increasingly focused on maintaining financial performance because of its impact on stock market valuations and investor confidence.

According to Sinha, listed developers face greater pressure than unlisted peers to demonstrate strong balance sheets because any deterioration can directly affect stock performance, fundraising ability, and investor sentiment.

He noted that cities such as Bengaluru and Hyderabad were traditionally viewed as some of India's most end-user-driven housing markets. However, many developers from southern markets are increasingly expanding into Mumbai and NCR.

According to him, Mumbai offers significantly higher ticket sizes, allowing developers to generate larger sales values with fewer unit sales. He argued that selling around 100 units in Mumbai can sometimes generate transaction values comparable to selling nearly 1,000 units in parts of Delhi-NCR.

Sinha also argued that a large share of cash-based investment activity is concentrated in the NCR market. He made a controversial claim regarding financing practices in parts of the market, describing what he referred to as “profile finance.”

According to Sinha, in some cases investors may provide substantial amounts of cash to developers and receive larger-value inventory allocations backed by bank financing. He claimed that a buyer who provides a significant cash component may also receive access to inventory whose financing structure allows developers to raise additional funds through housing loans.

Sinha further claimed that some developers effectively gain access to financing at housing-loan rates, which are significantly lower than alternative borrowing costs. He argued that this mechanism contributes to reported sales momentum and supports developer balance sheets.

While acknowledging that listed developers currently appear financially strong, Sinha cautioned that such trends may not be sustainable over the long term.

“This is a bubble that will eventually have to burst somewhere,” he said.

For end-users, affordability continues to be a major challenge. Sinha said housing in India's top-tier cities has moved beyond the reach of many households.

He cited a recent report suggesting that even among India's top 5 per cent income earners, purchasing a home without financing could take decades.

According to Sinha, a top 5 per cent income earner relying solely on savings would require approximately 109 years to purchase a home in Mumbai and around 65 years to purchase a home in Gurugram without financing.

He also argued that many buyers who previously sold land or property in smaller towns to purchase homes in major metropolitan areas are increasingly finding such transactions insufficient to bridge the affordability gap.

According to Sinha, housing in India's largest cities moved beyond the reach of ordinary households long ago and has become increasingly disconnected from income growth.

“Real estate has become a place to park money,” he said.

He further argued that policymakers may eventually need to decide whether housing should primarily be treated as shelter, an asset class, or an investment product.

Sinha went even further, arguing that in its current form, real estate is no longer functioning primarily as either an asset class or an investment product but increasingly as a vehicle for capital parking.

According to him, the vast majority of Indians do not possess the surplus capital required to participate in such a market. He claimed that roughly 95-96 per cent of the population does not have money available to “park” in real estate, making the market increasingly dependent on a relatively small pool of deep-pocketed investors.

He argued that real estate has increasingly become a trading commodity dominated by investors with substantial capital rather than a housing solution for average homebuyers.

According to Sinha, investors should not expect a sharp property price crash similar to the US 2008 crisis or Japan's asset bubble burst. He explained that real estate corrections often take the form of a “time correction,” where prices may remain stable while inflation and other asset classes rise, leading to a loss in real terms.

He also said developers often adjust pricing indirectly rather than cutting headline prices, using methods such as discounts, negotiable charges, and flexible payment timelines.

At the same time, he warned that the current market dynamics are unsustainable and that a correction, whether through price declines or prolonged periods of stagnation, is likely to occur in the future.