Mumbai Witnesses Drop in Prices of New Properties in October – December 2019
The housing market in Mumbai suffered a major downturn in the midst of the extreme credit crunch and new regulations. In the last quarter of 2019, home sales in the region rebounded under enormous pressure following a 10-12% fall in the prices of new housing units in India’s most expensive real estate market in Mumbai:
img1: drop in prices of new properties
The ongoing economic recession has severely affected developers across India, especially in larger metropolitans like Mumbai, where project construction costs are unbearably high due to high land acquisition and labor costs.
The stagnant capital inflow due to the Non-Banking Finance Companies (NBFCs) crisis coupled with a 33-month high residential inventory overhang compared to the ideal 18-24 months not only mutilated the market sentiment but also the construction rate of housing projects.
Therefore, several developers in the city shifted their focus from the aspirational luxury housing units to smaller configurations throughout the past year to ensure adequate working capital and revive the business operations. The realtors ‘ primary intent was to sell small, high-in-demand homes at a lower cost than mid-housing units, to boost sales volume.
Builders face a financial crisis: Mumbai’s property prices can drop:
In the coming months, given the ongoing financial crisis plaguing real estate developers, the price of residential properties in the city can drop significantly, a study said. Builders may have to reduce prices by at least 10 percent due to a lack of options, according to a survey by real estate research firm Liases Foras. Many funding sources have dried up and the constructors continue to be saddled with huge debts. Constructors now have to almost double their current sales to stay afloat.
They’ll need to lower the prices for this, “said Pankaj Kapoor, CEO, Liases Foras. Today, the Metropolitan Region of Mumbai (MMR) is seeing a sale of nearly 70,000 units annually, 18,000 of which are sold in the Mumbai region.
The unsold inventory has meanwhile crossed a whopping 2, 80 lakh houses in MMR, of which 1, 30 lakh are in Mumbai. Consequently, the most viable cash-raising alternative for builders is to clear existing inventory.
To architects, it has now become a matter of life. In the coming days, we may see price cuts, “told Hindustan Times Ashok Mohanani, vice-president, National Real Estate Development Council (West).
img2: housing market in Mumbai suffered
Many factors contribute to the current financial condition, including the IL&FS scam and the advent of the Real Estate Regulatory Authority (RERA), both of which have made it difficult for constructors to raise funds without due diligence.
In comparison, two of the three big real estate actors – government, financial institutions & builders – are unlikely to budge and relax norms. As a result, the cost of lowering prices will collapse on the owners.
In the second half of 2016, data compiled by Knight Frank shows the rate of residential properties in Mumbai fell by more than a 10th from their height. Despite RBI’s price adjustments and three away-to-back rate cuts, homebuyers still opted to sit on the side-lines hoping for a further price adjustment in advance, the property consultancy firm said in a survey on Tuesday.
A decline in India’s economic activity dampens buyers ‘ sentiments, and Mumbai’s woes echoed through other cities like Pune, Chennai, and Kolkata, which announced a slump in the demand of apartments. With investors and developers struggling to reconcile with a new regulator, tax regime, and a cash crunch in the shadow banking industry, the residential property market has been in chaos over the past three years.
Residential real estate mood in Mumbai continues to be somber and withdrawn, said Gulam Zia, Knight Frank’s executive director, in the survey. The clouds on the housing industry are getting longer with more skeletons tumbling out of NBFC cupboards.
Mumbai was the only market to show a 14 percent increase in the stock overhang. The sector for office property continued to perform well with both availability and sales rising to a decade of high demand led by IT facilities and co-working space.
Buy, Sell, Rent Properties in Navi Mumbai Houses
Navi Mumbai Houses are the biggest real-estate property portal (website) in Navi Mumbai, Mumbai, and Thane. Do you want Buy / Sell / Rent a house, flats in Navi Mumbai our portal helps you to find a home (Flat) to your budget so please visit n find.
For more information visit: https://navimumbaihouses.com/