Sale of property in city hits 3-year low: Reporthttps://indianexpress.com/article/cities/mumbai/sale-of-property-in-city-hits-3year-low-report/

Sale of property in city hits 3-year low: Report

The city’s realty market seems to have reached an impasse with inventory mounting to a three-year high and absorption nose-diving to a three-year low.

The city’s realty market seems to have reached an impasse with inventory mounting to a three-year high and absorption nose-diving to a three-year low.

According to the latest report by Kotak Institutional Equities,Mumbai has seen a total absorption of 1.7 million sq ft residential space in January this year,a decline of 60 per cent as compared to January last year. This is the lowest recorded absorption since December 2008. Proportionately,the inventory or the number of unsold homes in Mumbai has peaked to a 32-month high.

In the three months leading to January 2012,new residential launches in Mumbai have fallen by a staggering 87 per cent as compared to the same period last year. The report says that after a brief lull in the market caused by the prolonged uncertainty in the Development Control Rules (DCR),developers are slowly launching new projects. However,lack of sales has meant that most launches are smaller sized projects with only one in 12 new launches being bigger than 0.3 million sq ft in size. “The volumes are not moving and the inventory is high; Mumbai may see a price correction this year owing to these factors,” said Jasdeep Walia ,analyst at Kotak Institutional Equities.

The report points out that though figures show that overall prices have registered a decline in February,this could be largely due to the discounts offered during pre-sales and pre-launches in certain projects or due to the fact that most sales are happening at locations where the prices are lower. It states that in the property market across the country,there has been “further deterioration in absorption,weak launches,build-up of inventory and further moderation in housing loan uptake”.

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RBI’s housing credit data indicates that hike in interest rates has adversely hit housing loan uptake. The year-on-year housing loan growth that was in the range of 15-17 per cent in January-September 2011 has fallen to 13 per cent in January 2012.

However,credit rating agency CRISIL holds that prices won’t fall in Mumbai due to the steep hike in input costs. Sudhir Nair,head of CRISIL Research,said prices are expected to remain steady for a while except for south and central Mumbai,which will witness a 6-10 per cent decrease. He added that the latent demand of 2011 is likely to translate into actual sales this year,leading to a 10 per cent increase in new home sales.

The slump has had developers worried. For the first time ever,the Confederation of Real Estate Developers’ Associations of India (CREDAI) has called for a two-day meeting of developers beginning this Wednesday in Pune.

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