While Mumbais property market may not have seen any significant price correction,a recent report by property consultants Knight Frank shows that of 23 cities across the world,Mumbai has registered the maximum decrease in prices over the last one year.
According to the report,Prime Global Prices Index,prices of residential prices in Mumbai have fallen by 9.1 per cent. In comparison,the average price change in Asia-Pacific is only 2.5 per cent while globally it rose by 1.4 per cent.
In a similar report by international property consultants CBRE,the revival of the economy saw developers jacking up their rates by 40-50 per cent,numerous interest rate revisions by the RBI and tighter lending norms towards the end of 2011 led to a substantial supply pile-up in Mumbai resulting in a downward pressure on prices.
Speculation led to overpricing of projects and an increase in cost of credit led to sluggishness in demand impacting buyers decision. Home buyers adopted a cautious approach and deferred purchase decisions and investors were deterred by rising valuations and speculations in key micro-markets, the report stated.
The report also attributes the stagnancy in the market to low availability of affordable residential projects in the city.
Some of the major projects launched in 2011 include Lodhas New Cuffe Parade in Wadala and Fiorenza in Goregaon,Rustomjees Paramount in Khar,Nish developers One Avighna Park in Currey Road,Ackruti citys Monte Metro in Peddar road.
All these projects are priced at Rs 14,000 to Rs 60,000 per sq ft.
The CBRE report also states that sales of residential plots may get a boost following the RBIs decision to reduce repo rates in the first quarter of 2012-13.
As a rsult,lending rates of banks are expected to decrease,leading to more home buyers. Also the drop in transaction volumes might lead to lowering of prices over the next few months,which would in turn increase the demand for housing in Mumbai.
It said,Prices are expected to remain stagnant for the next few months. An upturn in transaction may lead to an appreciation in capital values by the second half of the year.