Top officials of the housing finance companies say that the decision to freeze new investments will continue till the industry shows signs of revival. "Some of the Mumbai's best builders are unable to pay back loans. Many of them have offered us to take over their projects or apartments as against the amount of loans taken earlier," says a Life Insurance Corporation housing finance official.

HFCs are not enthused by the barter system option and looking at the option of taking legal action to get back their money. The other housing companies which have taken similar decisions are HDFC and GIC HF.

HFC officials say that the outlook for the industry, led by Mumbai's prices, looks bleak due to three main expectedannouncements by both State and Union government. These are: A likely reduction in the coastal regulation zone, reduction in the prices of MHADA's luxury flats in Powai and Oshiwara, and finally an amendment in the Urban Land Ceiling Act. "If all the three decisions are taken by the respective governments, the real estate prices of the entire country will collapse and with it many builders will go down," says an industry observer.

In fact, officials say if there is a run on any Mumbai-based builders by those who have already booked apartments, they will be unable to pay and pull down shutters. "We can have cases like CRB in the industry," he said.The internal reports made by the HFCs suggest that speculators would be the another segment defaulting in payments. "At present we are scrutinising our entire loan portfolio," says the LICHF official.

Absence of any regulation in the industry is another factor which is dissuading the foreign investors and any resultant recovery. Low quality of construction, costoverrun of the projects, and high stamp duty are the other reasons why foreign investors have shunned India, says US-based MNC, Cushman and Wakefield's, report on the Indian industry.

Hong Kong-based Brooke Hiller says that due to over development in the 1992-94 boom period, property prices in India have fallen 40 per cent. It says due to over-regulation in the real estate industry, investors are not looking towards the housing industry.