The Indian real estate sector is collapsing due to increasing costs of financing.[1] Real estate projects in India take a long time to complete due to a complicated regulatory mechanism. Several of India's publicly traded real estate firms are in debt. [2] The inventory of unsold real estate assets is growing and it is expected the market will undergo price corrections. [3] According to the Mumbai-based market research agency, Liases Foras, 30% of the transactions in the real estate sector are done with black money. Experts expect new property prices to fall up to 50% in the next three months in Tier 1 cities.
In 2006, Himanshu Joshi, the Director of Monetary Policy Department, Reserve Bank of India, raised concerns about the rapid growth of the housing market and its sustainability. The paper said that the house prices in India were correlated more with interest rates and credit growth, and very little with the growth of real income.
In a September 2013 interview, Venkatesh Panchapagesan, the Head of Century Real Estate Research Initiative, IIM, Bangalore, said that the weakening of the rupee and lack of credit in the sector would cause prices to fall. He also said the prices should be falling faster, but due to the lack of transparency in the sector, it is not doing so