In Delhi, several developers in the National Capital Region have started offering deeper cash discounts and have increased their marketing efforts. Developers are banking on more `genuinely-priced' products, a good cash discount and more advertising to lure buyers. "We didn't offer any discount during the festive season last year," said Raheja Developers chairman Navin Raheja. "But this time, everyone is giving it, since market conditions have changed."

Raheja Developers is offering an outright discount of Rs 200/sq ft or around 6-7% at its soon-to-be-launched high-end project in sector 109 in Gurgaon. Aiming to lure government employees -- beneficiaries of the Sixth Pay Commission recommendations -- the developer is offering them an additional discount of Rs 100/sq ft, which is over and above the Rs 200 discount offered to all.

This quarter, developers are caught in a pincer-grip of falling sales, dropping rentals and tight liquidity conditions. Developers said they have also asked industry associations and their officials to help bring back investors and buyers' confidence in the real estate sector. The overall quantum of sales dropped over 60% in the past quarter due to rising interest rates and additional pressure on household budgets.

Developers across the country have now pegged hopes on the upcoming festive season, offering to pay stamp duty and gifts like a car or free home furnishing.

For instance, Mumbai-based Sunil Mantri Realty has waived stamp duty (5% of property value) for buyers at its Mantri Park project in Goregaon (East) in Mumbai and is also offering 5% discounts at its Bangalore and Gwalior projects.

The Citigroup-backed Golden Gate Properties has offered a car for every customer booking a flat at the Golden Palms project on Hennur-Banaswadi road, some 30 minutes from Bangalore's new international airport. "We are offering a Skoda Fabia to every customer who books a flat at the Palms," said Sanjay Raj, executive director at Golden Gate Properties. "For those who already own a car, we are providing a discount equivalent to the value of the car," he added. Golden Palms comprises 450 apartments measuring 1,400-1,800 sq ft and is priced at Rs 2,600 per sq ft.

However, industry observers say that cutting prices alone may not bring in buyers, as sales have touched an all-time low and steep interest rates have put off many prospective buyers. "Home sales are at an all-time low. Pricing is a crucial factor, but it has to be supported by required policy support to revive the market," said Pranay Vakil, chairman of real estate consultancy Knight Frank India.

After RBI raised interest rates, commercial banks have increased lending rates by 50-100 basis points. This has led to a sharp drop in pre-sales for property developers, their main source of project funding. Developers have also been hit by the falling stock markets, increased lending rates and bar on external borrowings which have limited their cash flows and execution capabilities.

"Real estate in India is very price- and EMI-sensitive. A Rs 100 discount is worth more than Rs 200 of freebies," said Sanjay Verma, executive managing director for South Asia & Australia at consultancy Cushman & Wakefield. "This is especially true in the affordable to mid-budget segment that accounts for 70-80% of the realty market," he added.

On an year-on-year basis, Mumbai home prices have continued to rise. Home prices have risen 15% in the past six months.