Skyrocketing property prices over the last few months have taken housing beyond the reach of the salaried class,with barely six per cent of the total new housing stock in Mumbai priced under Rs 50 lakh. On the other hand,a staggering 46 per cent of these flats cost over Rs 1 crore.
Figures compiled by real estate research agency Liases Foras show that of the 8,000-odd flats that make up the unsold housing stock,hardly 500 are priced below Rs 50 lakh. These are mostly one-room kitchen flats or one-bedroom flats in projects by small-time developers from Kurla-Tilak Nagar to Mulund. The data include the primary housing stock in all under-construction and ready projects within municipal limits of Mumbai stretching from Colaba to Dahisar and Mulund.
Analysts say these rates are the result not only of increasing prices and sizes of new flats but also of the heavy loading by developers. Most new flats come with frills such as flowerbeds,viewing decks and amenities like clubhouses and swimming pools that are included while calculating the super-built-up area on which flats are sold. This notional loading is as high as 50 to 80 per cent of actual carpet area.
In case of one-bedroom flats,builders cant justify a loading of 80 per cent on a flat with a carpet area of 300 sq ft to a buyer who is already hard-pressed for money. It is easier to cover up the discrepancy between actual size and loading in larger flats which is the reason why most developers today are constructing only two to four bedroom flats, said Sandeep Sadh,CEO of Mumbai Property Exchange.com. The trend is catching on outside Mumbai,too,with developers like Lodha launching Rs 1-crore-plus flats in Dombivli.
With developers supplying mostly large flats,home-hunters have no option but to wait for pricing and sizing to get realistic again. Abhijit Satpute,32,manager at a bank in Cuffe Parade who lives on rent in Dahisar,said,I have a budget of Rs 35 lakh but even 1BHK flats with a carpet area of 350 sq ft at Dahisar are priced at Rs 53 lakh. There seems to be absolutely no correlation between the rise in income levels and property prices,which have increased 35 per cent from last year.
Pawan Swamy,managing director (West India) with property consultant Jones Lang LaSalle Meghraj,says the huge supply at fairly unaffordable rates is bound to put downward pressure on pricing. According to one estimate,the suburbs of Lower Parel-Worli alone are set to have more than 7,000 new flats in the near future with developers like Lodha,India Bulls,Orbit,Piramal,DLF and K Raheja Group planning luxury apartments worth at least Rs 5 crore. Swamy says to be able to afford the current prices,one has to earn at least Rs 1.25 lakh a month. Todays property market is investor-driven as they do not require leverage to buy at these high prices. It is best for end users to wait till the prices get a bit realistic; in another 15 months or so prices are bounds to dip by 10-15%, he said.