Will real estate be the next sector to fall, even as we are dealing with a 60 per cent crash in the stock market? Let’s help you find out what you can do even as this crisis comes to our doorstep.

In India, figures show that almost 70 per cent of residential homes in India are sold between October-November to March of the following year. So perhaps if you are right now looking to buy a home, the big question on your mind is should I buy a home or should I postpone this decision Are prices likely to come down? Can I get a better deal. Several of you who are keeping your eyes open for the right property have also seen a slew of offers from builders.

So, are prices going to come down?

Absolutely. What we're headed for is a real estate meltdown in India and the stress signs are evident to everybody. With every market in distress, why would real estate be left out?

Prices went up on an average 300 per cent between 2003 and 2007. Check prices between 2007 and 2008, they're cooling down.  Ten per cent is already shaved off and there's a lot more to go.

Real Estate Meltdown - The price slide begins

We've taken one area in a city which has been booming to check the prices and this is how they stack up.

#NCR- Gurgaon ran up 300 per cent between 2003 and 2007 and this year down about 12 per cent.

#Navi Mumbai ran up even more on an average – 330 per cent up in 5 years- cooled now by about 15 per cent already.

#Bangalore and Chennai ran up less than Delhi and Mumbai- about 200 per cent and these markets are now down.

When do prices come down ?

Simply when there are not enough buyers for any goods and then sellers are forced to put the goods on sale or bring down the prices.  It is not hard to predict where prices of real estate, especially residential homes, are likely to go from here. There are obvious signs that buyers are disappearing. The first big reason why they are; Prices of residential homes in this country are way above affordability. It’s a joke which probably you've cracked with your friends as well. It is scary when nothing liveable in your city or suburbs is available for less than Rs 50-60 lakh. How many people can really afford homes of Rs one crore and above? But when the party is on, everything goes up and last two years speculators and investors have driven prices to an unaffordable level in most leading cities and towns of the country.

Top that with rising home loan rates, making an expensive home purchase even more expensive and unaffordable. A Rs 60 lakh loan today means you end up paying almost Rs 75,000 as EMI.

And while we are hoping home loan rates should come down, especially after the RBI slashed repo rates, large banks have come forward to say they may not be able to do that in a hurry because inflation is still in double digits.

High inflation also means more money for daily expenses and less for paying loan EMIs.

Add to this the job market uncertainty. Job losses, pay cuts, and not enough new opportunities in the coming two years are a very real possibility in several sectors. Where will the new buyers come from?

We've all seen and have been hurt by the severe stock market meltdown.  People have made notional and real losses in stocks and its only human to cut back, run for safer havens and not take big investment calls when you bleed on portfolio.

The mood is somber, overall pessimism with the economy is not helping.

If buyers have disappeared, sellers are pretending that things are still normal. But they are not. Here are the signs.

Time was when we were in a seller's market - we had to buy what they sold and NOW, else it would be gone. Stories about entire towers of flats being sold out on day one of the opening of a new development were not unusual. But that was 2005-2006. Not today.

We're reached a place where sellers are wooing buyers with zero EMI deals, freebies, discounts and have begun to talk of carpet area rather than super area.

So, is there a meltdown ahead?

A look at the signs that shout: YES. While the sellers are not decreasing prices yet and buyers are not buying anymore what we have is a deadlock in the market. The sellers are doing all they can to attract buyers without dropping prices.

Real Estate Meltdown Signs

Seller

# No EMI till possession schemes - this essentially means that you will for a down payment, be able to defer EMI till you get possession - but if the builder is unable to complete the project your down payment gets stuck.

#Freebies like waiver of stamp duty, white goods. think of the value of the gift in percentage terms.

#Now 'free' Mercedes cars. What is the builder earning that he can give a "free" mercedes cars?

#Aggressive sales pitch through SMSs. This never happened earlier - it was a sellers market, but sales pitch is now feverish.

Unitech is down 87 per cent in one year. India bulls real estate is down 82 per cent, DLF has melted down by over 75 per cent, HDFC has lost over 70 per cent and Akruti city around 31 per cent.

And wise men say, stock markets are the best pre-cursor to what the future holds. January this year, you had a stock market collapse and right after you saw real estate prices cooling off by 10-15 per cent.

Clearly the confidence in real estate companies delivering has gone missing. Most don’t believe that these companies will be able to raise capital at reasonable rates to complete projects or be able to sell at expensive rates.

What To Do: Investor who wants to buy

# Wait, better prices ahead

What To Do: Investor who has already bought

# Sell, if you need the money

Home Buyer

#Buy only if building already ready for possession or begin building down payment for the next year.

Here's a view from ICICIdirect.com:

# Restructure home loans with your bank in case you can’t afford the EMI.

# Look at a balance transfer option to a lower rate bank/institution.

# Pre pay a part of the loan to keep the EMI at the same level

# Increase the tenure on the loan. BUT ensure that it does not cross your retirement.

# If pre-paying check for pre payment charges, if any, that your lender charges.