On April 15,however,gold prices tumbled to their lowest in 30 years to $1,360 levels for a troy ounce (around 31 grams). No analyst or bank saw this collapse coming,which prompted Reuters to remark that “even the most fierce gold bulls must be feeling sheepish”.Buyers in gold-hungry India have flocked to the jewellery markets to cash in on this rare opportunity. It is time to turn sceptical and ask,could this “impossible” hit the other popular avenue for wealth creation and preservation,the real estate market?Most surveys and reports written by expert property observers have usually pointed to a scenario,with some allowance for minor variations,of property prices reigning high. This is a situation as sticky as property prices: absorption not going up,buyers delaying purchases,affordability quotients getting lower,but prices do not seem to come down.A recent report by global property consultancy Knight Frank says that more than one-fourth of the total 5.2 lakh housing stocks being constructed in the National Capital Region (NCR) remain unsold due to weak consumer demand. The report,however, adds that prices have actually risen due to increased construction costs and surging investor demand.Taking a cue from what has happened with gold,when will realty experts get their moment of sheepishness?Even as the comparison may be tempting,experts warn that the dynamics at play are very different,the only link being that the performance of real estate as an asset class is dependent on the macro-economic factors that also dictate the performance of other assets.“Price movements in the real estate sector are the result of supply and demand. The demand drivers for real estate are not the same as that for precious metals. Though,in investment terms,they technically fall under the category of asset classes,the demand for residential property stems from the desire for home ownership that is hard-wired into the Indian psyche,” says Anuj Puri,chairman and country head,Jones Lang LaSalle India,a real estate consultancy firm.Puri further adds that prices of precious metals are not location-specific,meaning they rise and fall uniformly. “This is not the case with real estate,which performs differently at different times in different cities and micro-locations.”Other experts believe that gold is not viewed truly as an asset class in comparison to real estate. “Its status is somewhere in between consumption and investment good. People sell gold only in emergencies,and hence does not compete for investment as other asset classes would,” says Piyush Tiwari,head of the school of real estate at the RICS Amity University School of Built Environment.Another view is that when seen from an investment perspective,there is no one-size-fits-all formula for real estate as an asset class. “Three parameters for successful investment in any asset class are: when to invest,how much to invest and when to exit. In real estate,three additional variables are where to invest,into what type of real estate and in which location,” says Puri.“Gold is also not correlated to real estate,so the price of the two do not move together. In a portfolio it makes sense to hold both. The size of investment per transaction in gold and real estate are not comparable. People buy gold in small quantities but with a house one can’t do that. Given these characteristics,my sense is that fall in gold prices would not impact real estate,” adds Tiwari.One factor to be considered is investor behaviour in times of market volatility,which prompts them to invest in both gold and property as a diversification strategy. This also tends to push down property prices,though in the short term.“In our experience,what we have seen is that when gold prices come crashing down,there is a decline in property prices as well. But the trend is for a very short period. In the long term,there is no major correction in prices due to diversification in gold,” says Harinder Singh,MD,Realistic Realtors,a Gurgaon-based real estate consultancy.That should be good news for fence sitters. “Gold prices are coming down as the overall sentiment of pessimism is driving the market. However in mid-term and long term,both property and gold are very lucrative and safe investments which will always reap rich dividends despite inflation,” adds Singh.Neeraj Bansal,a partner at accounting firm KPMG too expects the dip in gold prices to benefit property prices as gold and financial sector investment usually move in opposite direction. “Since property is a subset of financial sector,this should provide a positive push to the sector.”A report by the Reserve Bank of India says gold and housing price inflation usually move in the same direction. “These two markets have provided effective inflation hedges. This implies the reasons that lead to an unwinding of gold prices could impact housing prices too in the same way,” the report says.With Mr Market’s affection for gold turning fickle,prospective home buyers who baulk at high prices can only hope that the gold rush will now result in lower house prices.