@only_a_man In an economic market, determination of price takes place only when an actual transaction takes place. If you can hold that off, the “price” does not come down. This problem (and this opportunity for manipulation) is par for the course in all illiquid transactions - for example startup stocks.
Coming to real estate, the only transaction that one is forced to perform on the clock is EMI payments or debt servicing to the financing institution. So builders can be forced to sell instead of hold; i.e. property prices will come down only via these two mechanisms - flat owners can’t pay EMI, or builders default on bank loans.
The US crisis happened when there were “subprime” loans made to people who could not repay the EMI on time. In India getting bank loan for property without income stream is still difficult so that avenue is tight.
The other aspect, builders defaulting on debt, is what people are expecting. This is predicated on two facts: builders actually fund their projects using loans in white from regular financing institutions, and that there is a strict way of the bank initiating the NPA and recovery process from the builder on time.
Both of these are murky in the Indian RE market. Large builders might be financing from audited institutions, but taking smaller players into account, on aggregate the financing itself is in black. And when debt is not serviced, banks are reluctant to mark it as NPA, or can be convinced to not mark it as such, because of their own internal pressures.
The NPA regime is being tightened, but still has a long way to go. And the black economy needs to dry up before builders are forced to turn to law abiding financing sources, It’s likely that unless there is some trigger, the current rate of decrease in property prices might not lower further.
