Effect of terrorist attacks on India Property Market

The recent terrorist carnage in Mumbai has pushed India into the spotlight with many questioning the horror and condemning those responsible. In the aftermath of the attacks, concerns have been raised about the country’s financial and commercial economy with attention drawn to the deceleration of the Indian property market.

India’s property market was previously thought to be a ‘crunch-free haven’, being seemingly unaffected by the recession. Merrill Lynch had even predicted a 700% increase in property prices from 2005 – 2015, yet evidence has now shown a damaging slow down in home sales.

The immediate response to the attacks with property advisors revealing a massive loss of pace in enquiries and sales of properties in many areas of India. Concerns are rife that because British and Americans were targeted in the attacks, there has been a vast loss of interest in property entrepreneurs from these countries. There are also worries of more attacks resulting in property demand decreasing further.

The terrorist attacks are not solely the reason the markets in India have been falling back. Recent months have already seen a great deal of pressure on India’s property trade with predictions of land prices falling by a quarter in the coming year. The recent attacks have magnified the flailing market but the real causes being the uneven supply and demand in property with there being more property than people are actually willing to buy. With the recession diminishing confidence in buying property, interest rate upsurges together with the rapid rise in home prices help to slow sales of properties. There is also the ‘wait-and-watch’ effect with many potential investors waiting for prices to drop so they can take full advantage so there is hope for a pick-up sometime soon.

In the short-term there has been an effect as a result of the attacks but it is important to remember that the property market was already sluggish before the attacks.

But bargain hunting anyone?