Mumbai real estate price witnessed a slight fall in recent years. Knight Frank a well-known Market Research Firm reported that the property price has gone down in many Mumbai markets. Many realty firms suffered loss as sale has gone down by 70%.  Higher growth of interest and the stingiest Housing Loan Schemes pulled the demand down. It is estimated that around fivefold increase in the interest rate happened during 2008 to 2012. Moreover the RBI keeps very strict with providing house loans. The housing loans are reduced with a view of curtailing the over flow of money.

RBI stated that out of its 5.31 lakh crore credit to the real estate sector, 78% is Housing Loans and only 22% of the amount is given to the builders. The RBI had made it very strict with the housing loans which lowered the demand and price. Earlier most of the banks were providing 100% loans but none of the banks provide more than 85% of the loan. For example if one wants to purchase a home of 20 lakhs he must have at least 3 lakhs at hand. The increase in the repo rate to 325 basis points made it difficult for the banks to hold excess money and lend money. The rate at which a bank borrows from the central bank is called repo rate. The growth in repo rate is meant to block the over lending from the RBI by the commercial banks. All these affected Mumbai Real Estate Price Rate inversely.

Mumbai Real Estate Price Rate Factors

1. Higher Interest Rate
2. Strict housing loans
3. The increased Repo rate
4. Over Supply
5. Lesser demand.
6. Freebies
7. 5 to 8 % Discounts
8. Fewer  Investors
9. Growth of suburbs like Noida and Gurgaon

The sales value of Real estate sector have gone down 15% from FY -2008 (Fiscal Year) to FY-2012. The net profit also suffered a drop of around 67%. The research of HT (Hindustan Times) showed that the property price is all set to go 20% to 30% down due to the oversupply and lesser demand. Though the experts are of varying opinions the survey conducted among the top ten realty firms proves that the supply is more than the demand. The builders offer many freebies and discounts amounting to 5 to 8 % of the property value to increase the demand but at the same time they are very conscious not to slash the prices beyond the cut price. According to a real estate analyst, the reason behind this is that they are able to access capital either by restricting loans or from private equity funds. Loyd’s TSB International Global Housing Market Review reported India to hold a growth rate of 284% in house prices since 2001. The number of investors also is decreasing. The instability of Mumbai real estate attracts fewer people and they find the suburbs like Gurgaon and Noida as more attractive and profitable for RE. The increasing number of freebies and discounts offered by the builders show that the demand is lesser than the supply. These discounts and offers enable one to acquire the property at a lower price level. The loss of price does not mean that the price has gone very low but it means loss of price by fractions.