Faced with a sharp decline in home sales and declining cash flows, property developers are doling out minor discounts and freebies to boost home sales during the ongoing festive season.

Mumbai-based property developer Sunil Mantri Group is providing 'extra cheer' to its buyers.

Under its offer 'Mantri Mahotsav', it promises cash discounts or freebies ranging from Rs 30,000 to Rs 100,000 across its housing projects in Mumbai, Bangalore and other cities.

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The properties are priced between Rs 30 lakh (Rs 3 million) and Rs 1 crore (Rs 10 million).

"Buyers have waited for long and they have realised that interest rates will stay high for the next one to two years.

"They are also seeing that prices are not declining," says Sunil Mantri, chairman and managing director of the Sunil Mantri Group.

Nirmal Lifestyle, another city-based real estate firm, offers free stamp duty and registration in its Lifestyle City project in Kalyan, on the outskirts of Mumbai.

A two-bedroom apartment costs nearly Rs 34 lakh (Rs 3.4 million) and the stamp duty and registration charges come to around Rs 200,000.

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In the national capital region, Noida-based Supertech has come out with a lucky draw to make its buyers 'feel special', where the winner can get a studio apartment under its project 'North Eye' in Noida.

The apartment is priced at around Rs 55 lakh (Rs 5.5 million).

The festival season between October and February accounts for nearly 60 per cent of the annual sales of developers.

According to realty research firm PropEquity, home sales have declined by 41 per cent in the Mumbai Metropolitan Region in August compared to the same month last year and around 52 per cent on an annual basis in the National Capital Region in the same month.

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Manish Mehta, vice president, Agni Property, a property services firm: "Developers want to entice fence-sitters to buy the properties with discounts and freebies than to actually cut the prices.

"They (developers) know that if they cut the prices, they cannot increase them later."

But will small discounts and freebies really help revive sales? Bankers do not think so.

"I don't think small freebies offered by developers will really help in pushing up the home loan demand.

Ultimately, it is a question of affordability and the borrowing will depend on property prices and interest rates. Property prices in places like Mumbai and Delhi have gone up sharply.

Interest rates are also high now. So, unless the developers reduce their prices substantially in these places, the demand for home loan is likely to remain subdued during this festive season," says R K Bansal, executive director and group head (retail banking), IDBI Bank.

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Adds Prashant Joshi, managing director and head (private and business clients), Deutsche Bank India: "So far, developers have been holding on to their prices, particularly in the Mumbai market.

We expect discounts to be offered during the festive season.

If the inventories are not cleared and if interest rates remain high, then there could be a small correction in property prices, especially in Mumbai. That could then fuel the demand."

According to Sumant Kathpalia, head of consumer banking at IndusInd Bank, freebies alone will not be able to lift housing loan demand as interest rates continue to stay high. Some developers also agree that price correction is inevitable if festive season does not get good response.