 "Mumbai home prices rise despite slowdown in sales")
Mumbai residential prices are continuing to see an upward trend despite slowdown in sales.
Home prices in Mumbai have seen 5-15% jump over the last six months despite the slowdown in home sales, said a latest report by HDFC Securities which compared the prices at the Mumbai Chamber of Housing Industry (MCHI) property exhibition last week in Mumbai with the prices in the expo held in April 2013.
“Quoted prices were 5-15% higher against the April 2013 expo, with prices in a few projects remaining flattish over the past six months. However, a fresh round of price hikes since April 13 continued to dampen buyers’ sentiments with minimal discounts on offer “said Adidev Chattopadhyay , an analyst with HDFC Securities in the report.
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Additionally, most projects within Mumbai city and suburbs on offer at the expo had a ticket size of over Rs 1 crore, which was beyond the affordability of majority of buyers.
“Another key emerging trend is prices in Western and Eastern suburbs of being on par with prices in Central Mumbai areas of Parel, Dadar and Matunga” Chattopadhyay said.
According to an analyst who did not want to be quoted, developers are increasing prices due to the fact that they had sold properties at lower prices and they were obliged to show appreciation in prices.
Agrees Gulam Zia, executive director at property consultant Knight Frank, “Developers have their own pulls and push. They will face huge resistance if they cut prices. In that case, earlier buyers would start asking for discounts.” Zia said.
Inventory pile-up across NCR, Mumbai Metropolitan Region (MMR) and Hyderabad have almost doubled in the past three years, according to a recent report from realty research firm Liases Foras.
The demand-supply mismatch in Mumbai residential properties is such that, according to a recent report by Knight Frank, the city will take seven quarters to exhaust the existing unsold inventory in the market, which is just below Hyderabad which is at nine.
The ratio has been on a constant rise since December 2011 and has increased from five to seven during this period. "Incessant price rise and higher concentration of premium projects with a ticket size of more than Rs 1 crore in new launches have limited the purchasing ability of home buyers resulting in a decelerating rate of absorption over the previous four quarters," says Knight Frank.
Chattapadhyay, however, said that few developers have not increased rates over the last 6 months in an effort to increase volumes. Additionally, many developers were willing to offer discounts of 5-10% in case of visible purchasing intent from the buyer.
“Developers may be increasing prices to give discounts to buyers. I was told that if you sit across the table, you will get 5-10% discounts” said Pankaj Kapoor, chief executive of Liases Foras, a realty research firm.
According to him, developers in Mumbai are doling out goodies such as Stamp duty and registration waiver, free parking lots, and so on to woo buyers.