Mumbai flat rates will come down in near future

Mumbai flat price drop now is marginal, will be steeper later, say brokers and consultants, though developers don’t agree.
It is better to continue waiting and watching before putting your money into that new flat, brokers and real estate consultants advise. They concede that prices have decreased but point out that the fall has been marginal; the real reduction is yet to come.
There had been talk of a price correction since the middle of lat year but builders continued to increase prices through the monsoon and Diwali, said real estate consultant Sandeep Sadh, CEO of the portal Mumbai Property Exchange.
“Only after November did they start decreasing prices, marginally. As of January, buyers want a reduction of more than 35%; they should not buy for another six months. It is a farce of a market with builders talking in the air and buyers fishing in the market. Unless builders offer a substantial discount, the market will stagnate till October,” said Sadh.
Only in the distant suburbs does availability outstrip demand, he said, with developers having started reducing rates by 10 – 25%. As per data compiled by the portal, existing rates in Mumbai on an average are not much different than those last September.
Ishwar Kakkad, a broker working in Dadar-Worli area, said that in today’s market he would rather sell than buy. “A price rise can be called healthy if it happens at the rate of inflation, say about 8 – 10% per year. But in the last three years, prices have increased by about 400%. Right now builders are willing to negotiate depending on their urgency; an actual price cut will come when builders openly announce one,” said Kakkad.
He expects the prices to fall eventually, by 40%, “but that will take at least three months to start”.
Faced with little choice as they are, home buyers are not jumping the gun. “The price of my 440 square feet rented apartment at Seven Bungalows in Andheri is now Rs 42 lakh; a year earlier it was Rs 45 lakh. So technically the decrease in price has been less than Rs 500 per square feet,” said Akshay Mishra, who works with a multinational financial firm. Mishra, who has been looking to buy a home for over a year now, has put his plan on hold.
Developers maintain that the market has already seen the much expected correction. “We clearly feel the prices have stabilised and that there would be no more decrease in rates. Developers haven’t increased their rates since March 2008; in the last three months, these rates have fallen by 5 – 20%,” said developer Dharmesh Jain, chairman of Nirmal Lifestyle and vice-president of Maharashtra Chamber of Housing Industry.

17 thoughts on “Mumbai flat rates will come down in near future

  1. I think property rates will not correct by as much, because prices of cement, steel, sand, aggregate are dependant on labour costs which are primarily based on inflation in rates of basic food stuff, and all the building products are a result of labour intensive jobs, be it raw materials or building process itself.

  2. 20th May2009.
    ARTICLE ON ACTUAL TREND OF REALESTATE AND IT’S FUTURE
    Rates of Real Estate market in Mumbai are yet to hit more. Because even after 30% current discounted rates, none of the affording customer’s class is available. Over all only 6% customers were registered their transactions/sale deeds in the regional office of the sub-registrar and in detailed survey this sale of flats is classified in two categories Viz.:-1)4% customers are transacted; due to not have any option, other than to purchase the accommodations at the available discounted rates in the market. 2) 2% customers are always remains in the market to deviate their jack pot income. After up to date detailed survey from Mumbai stamp duty and registration Authority, they confirmed real estate sales transactions and in the opinion that, from overall customers only 6% transactions were took place in the last 6 months from above pattern customers and may continue up to May 2009.. If you will glance on the list for sale of flats available with real estate websites and agents/brokers, you will come to know that, not only newly constructed flats but reseller’s flats are still remain unsold from last 6 months, Customers are wondering but keeping mum while transacting the accommodations due to rates are still unaffordable. The basic thing behind non-transaction is loss of the job’s or major cut in the salaries of IT oriented and automobile industry employees. Hence the class of higher income group is absent in the market for whom the builders/developer were boosted the rates and also overtraded the land. On the contrary this previous higher income class is now not even in a position to pay there prescribed EMI. Accordingly their flats are in the door step of loan issued banks for auction sale. Therefore another 30 to 40% fall in the real estate market will only brings the real cash flow in the concern market. Otherwise none of the attractive polices of the builders/brokers will work. In this connection, we may ask one question and that is, which income class has boomed this industry? The simple answer is IT/NRI/Automobile/ construction and ancillary industries. Major employees of this industries s are either loss their jobs or major salaries are cut down. Hence in shorter sense we can say that, none of the persons can make drama of the money. It means real-estate industry has to face the real crises and overcome themselves with the real correction in the property rates and not with the strategies applied up to date. In all the property exhibitions, attractive schemes from the builders were launched such as “ stamp duty and registration free from builders”, “No floor Rise”, “discount scheme on sq. feet rates is available for next 2 days”, “flats are in beautiful in natural surrounded area, visit with free bus facility”etc. etc. are proved fail. On the other part Share market index is also start booming after election result, this is all totally adverse atmosphere for real estate Industry. Because share market Index is always hedging type index, works with political activities. Share market investor class is always addictive with hedging type of transactions. Therefore Now and onwards specifically brokers remain alert and not to give any fake information of the rates to the buyers which they did in past few years consistently. Otherwise this market is already crashed and if overdose of the property rates will be given to ultimate customers, this market will collapse with it’s existence as it was happen in the recession of 1991 and 1996. Even new Congress govt. does not have any remedy to boom this industry. Discounted bank interest rates will be treated as placebo that would never be a real remedy; Govt. will construct new homes through MHADA, CIDCO, DDA authorities @ half of the rates than prevailing. Yesterday’s MHADA housing allotment lottery is the best example for it. Even TATA NANO HOUSING Project is also launched for budgeted 1RK and 1 BHK flats and others like Hawre construction co. are in a row to construct only budget oriented flats. This is nothing but danger warning bell for those, whose flats of 2/3 BHK are still remain unsold. Anyhow builders and developers have to cut down the prices though they have over traded. Thanks and Regards,
    Gultulsiyani.

  3. 25th May2009.

    ARTICLE ON ACTUAL TREND OF REALESTATE AND IT’S FUTURE

    Rates of Real Estate market in Mumbai are yet to hit more. Because even after 30% current discounted rates, none of the affording customer’s class is available. Over all only 6% customers were registered their transactions/sale deeds in the regional office of the sub-registrar and in detailed survey this sale of flats is classified in two categories Viz.:-1)4% customers are transacted; due to not have any option, other than to purchase the accommodations at the available discounted rates in the market. 2) 2% customers are always remains in the market to deviate their jack pot income. After up to date detailed survey from Mumbai stamp duty and registration Authority, they confirmed real estate sales transactions and in the opinion that, from overall customers only 6% transactions were took place in the last 6 months from above pattern customers and may continue up to May 2009.. If you will glance on the list for sale of flats available with real estate websites and agents/brokers, you will come to know that, not only newly constructed flats but reseller’s flats are still remain unsold from last 6 months, Customers are wondering but keeping mum while transacting the accommodations due to rates are still unaffordable. The basic thing behind non-transaction is loss of the job’s or major cut in the salaries of IT oriented and automobile industry employees. Hence the class of higher income group is absent in the market for whom the builders/developer were boosted the rates and also overtraded the land. On the contrary this previous higher income class is now not even in a position to pay there prescribed EMI. Accordingly their flats are in the door step of loan issued banks for auction sale. Therefore another 30 to 40% fall in the real estate market will only brings the real cash flow in the concern market. Otherwise none of the attractive polices of the builders/brokers will work. In this connection, we may ask one question and that is, which income class has boomed this industry? The simple answer is IT/NRI/Automobile/ construction and ancillary industries. Major employees of this industries s are either loss their jobs or major salaries are cut down. Hence in shorter sense we can say that, none of the persons can make drama of the money. It means real-estate industry has to face the real crises and overcome themselves with the real correction in the property rates and not with the strategies applied up to date. In all the property exhibitions, attractive schemes from the builders were launched such as “ stamp duty and registration free from builders”, “No floor Rise”, “discount scheme on sq. feet rates is available for next 2 days”, “flats are in beautiful in natural surrounded area, visit with free bus facility”etc. etc. are proved fail. On the other part Share market index is also start booming after election result, this is all totally adverse atmosphere for real estate Industry. Because share market Index is always hedging type index, works with political activities. Share market investor class is always addictive with hedging type of transactions. Therefore Now and onwards specifically brokers remain alert and not to give any fake information of the rates to the buyers which they did in past few years consistently. Otherwise this market is already crashed and if overdose of the property rates will be given to ultimate customers, this market will collapse with it’s existence as it was happen in the recession of 1991 and 1996. Even new Congress govt. does not have any remedy to boom this industry. Discounted bank interest rates will be treated as placebo that would never be a real remedy; Govt. will construct new homes through MHADA, CIDCO, DDA authorities @ half of the rates than prevailing. Yesterday’s MHADA housing allotment lottery is the best example for it. Even TATA NANO HOUSING Project is also launched for budgeted 1RK and 1 BHK flats and others like Hawre construction co. are in a row to construct only budget oriented flats. This is nothing but danger warning bell for those, whose flats of 2/3 BHK are still remain unsold. Anyhow builders and developers have to cut down the prices though they have over traded.
    Thanks and Regards,

    Gultulsiyani.

  4. Remember Onions sold @ INR 120 per Kg. They sell at market determined prices now.
    A 2 BHK flat for INR 40 to 100 lac. translates to INR 50k-120k emi pm.
    The same flat is available for INR 15k-35k pm. A clear savings of INR 35k-85k pm, which itself translate to INR 55 lac to 135 lac perpetual Deposit @ 7.5%pa.
    The maths clearly over weight towards rentals,vis a vis purchases. Going by the Price to Earning ratios, these become the most expensive asset class, hence the highside growth potential is again capped.
    Moreover the so called “premium” flats in mumbai are below the “poverty” line flats when compared to any property anywhere else, including other Indian cities like Gurgaon, Bangalore etc. That drives away “investor” who want to keep the “staying in” option open.
    The Indian,chinese & other asian economies have a phase lag, wrt the USA & EU, that pinch is just begining to be felt.The effect will be profound.
    The differentials are very much baised towards a big correction. Anything close to +/-50 % from todays rates may just be sustainable for the economy.
    Even the Onion sellers were frowning.

  5. When will the rates of flat come down…Middle class people like us finds it very difficult to think of a buying the house….How much one can stay on rent….

  6. Prices do not make sense for all…if it is middle class family it is way out of hand and if it is the rich one gets less for the money paid.
    High prices are only in the the interest of business surrounding real estate …I am not against business but for business that really creates great value for the common people.

  7. The property prices seem to be climbing. In my opinion the real estate sector is one of the most imp. basic necessity. The sector lacks transperancy. Does the government have any data as to how many units (numbers, sizes) have been constructed and sold. Who is buying and what is the source of income. Why we don’t have any linmit to the units owned by a individual or family. Also it should be made mandatory for developers to sell @90% units within say one year. This will reduce the number of unoccupied / vacnt flats

  8. be ready to see crash of not less than 70 % in the mumbais real estate. Look at the arrogance of the real estate agents and developers , this cycle of the housing boom is over , and I see downcycle statring very soon . Its all artificially made up bubble and has to go bust very soon !

  9. Yes. I too feel the prices will come down. There are so many flats (in thousands) which are lying empty in Mumbai suburbs. Low occupancy causes troubles like poor maintenance of ready buildings. Builders say that they are fully sold out but we are talking about the end users here and not only investors. Investors will not bring occupancy to the building thereby causing poor maintenance. Also a 2 BHK apartment in Goregaon – Borivali now costs more than 1.25 Cr which is far away from a common man`s reach. You can see building in these area in which possessions were given for more than 1-2 years and still the occupancy is as low as 40% or in some cases even lower. Also taking a housing loan to move into your new home has become very expensive and in order to be able to get such loan you should be earning in lakhs/month. Property rates should come down so that the common man can afford it. The sales in these areas for apartments have fallen drastically as I have heard from many Estate Agents and even they have started to fell the heat now. Buyers are willing to come forward provided rates come in their reach without the burden of 70-80% loan on them. Lets take an example of 1200 sq ft. 2 BHK flat in these areas. If you go to buy such a property in building by reputed builders, the rates start from 10K/sq ft Floor Rise Additional parking Stamp Duty and registration charges which end up to more than 1.3 Cr. How will a common man afford it? And if they say that these flats are not for a common man then who are they building numerous townships for? If they expect all foreigners and NRI and Industrialist to come and buy, they would still be able to sell merely 20% of the lot. So think again.. Let the prices come down. Let the sales come back to boom. Earn reasonably and build a happy township!

  10. The Flats ,We enquired to builders1-2-3 years back , was told by builders that all are sold, except 1 or 2 left.
    Now after several months even the building is fully Painted-ready, nobody occupied ,no movements of resident, except watchmens at gate.
    This is noticeable at night easily by Room lights off.
    The view at parel west,worli,dadar,Western suburb, New mumbai Highway is of full of empty concrete jungle.
    This shows that even though rates are increased or decreased, no 1 is buying the flats.
    Also at every corner gully & road so many construction are going on , Almost all over Mumbai this is same.
    I wonder how this is Going, So many flats ,building ,constructions & no occupants ..buyers.
    Think Real market is going to crash…..
    ……..Kumar

  11. Mumbai is turning into one of the most expensive cities to live in among all the cities in the developing world. And as the Indian government has started to take measures to curb inflation, many property developers are now faced with fund shortages. A number of analysts and economists believe Mumbai’s property market will see an oversupply between 2012 and 2013

  12. Yes, we wait for a decent 2Bhk flat in a good locality- with a budget of 70grands.
    Why dont builders remove or cut out on compulsary car parking?- floor rise and gym and swimming pools and the huge registation exp.and many other misc.costs asked to pay by the builders.
    Could that not be made available to the buyer only if they want such privilidges.

    Simple, or retired people may just need a comfortable home with a good pricing and in a good locality and may be a nice green garden for walking.This is more than enough.
    And thats exactly our need too.

  13. Yes, we wait for a decent 2Bhk flat in a good locality- with a budget ofRs 70.lakhs inclusive of all expenses.
    Why dont builders remove or cut out on compulsary car parking?- floor rise and gym and swimming pools and the huge registation exp.and many other misc.costs asked to pay by the builders.
    Could that not be made available to the buyer only if they want such privilidges.

    Simple, or retired people may just need a comfortable home with a good pricing and in a good locality and may be a nice green garden for walking.This is more than enough.
    And thats exactly our need too.

  14. Yes we want a simple and model house with green grass
    garden outside for evening walk in affordable price of
    IRS 70 lacs maximum including other expenses.This we need
    in our last stage of our age with free of any tension.

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