MUmbai's residential property prices are on the rise even as the buyer is not in a hurry to finish a deal. According to the city’s property registration data, there has been a 13% month-on-month drop in the number of apartments registered in August 2009 this year as compared with the previous month. This trend was holding out in September as well.
“As prices increase, customers shy away and this is evident from the registration data,” said Ram Yadav, CFO, Orbit Corporation. The slowdown in demand comes after an average month-on-month increase of 6% since March 2009. “The drop in sales is clearly visible in Mumbai as compared to other parts of the country. It is more visible in projects that cost over Rs 3,000 per sq ft,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research agency.
On the back of the global crisis, property prices were affected quite seriously and fell 15-30% starting April last year. This trend continued till the end of 2008 and prices showed a semblance of stability early this year.
As the economy started to pick up, a change was being felt from March this year. “A lot of pent up demand found its way into the market beginning March this year. However, with a 10-15% price hike, projects are not so attractive now,” said Hari Krishna, director, Kotak Realty.
Real estate agents profess a similar view. “Builders have increased prices faster than expected. This has forced buyers to defer their purchase decision,” said Vipul Shah, a property consultant. Builders have merely reacted to the sentiment which revolves around the demand picking up in the residential segment.
“An increase in prices has directly affected the demand for secondary homes. This shows demand is elastic enough to weather any increase in price,” said Ambar Maheswari, director, Investment Advisory for international real estate consultancy, DTZ India.
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