PTI

Mumbai: Financial services provider Edelweiss expects decline in real estate prices by around 60% over the next five to six years from its peak in the first quarter of 2008.

“Property prices in India increased sharply over the past 6-7 years, rising two and a half times over 2001 prices. We expect a price correction of 58% in real terms from the peak,” Edelweiss said in a report on real estate sector.

Stating that the industry has so far witnessed around 24% correction in real terms, the report said that the industry witnessed 8-10 months decline of the expected 5-6 years.

“We expect prices to correct by another around 30% in nominal terms in the next three years. However, prices in real terms, will continue to decline for about a year thereafter,” it said.

Analysing global property cycles across 15 countries, Edelweiss said that volumes are closely related to GDP growth and real returns on properties but share a weak relation with interest rates.

“From September 2006, the GDP growth rate has started falling and has come down significantly to 7.6% in September 2008. We expect the rate to go down further to 6% by FY10,” it said.