Soaring real estate prices are scaring away homebuyers in Mumbai. On November 3, HT had reported that the number of unsold flats in Mumbai has touched a record 32,000. It is now learnt that approximately 20,000 (68%) of these flats are priced at more than Rs1 crore. In contrast, a mere 2% are priced in the Rs25 lakh-Rs50 lakh range.These are the findings of Liases Foras, a leading non-brokerage firm that researches trends in the real estate market.
“It is more of a speculative market and rates are being quoted without any thought,” Pankaj Kapoor, CEO of the firm, told HT.
“To avail a loan for a flat costing more than Rs1 crore, the buyer should have a minimum annual salary of Rs20 lakh. Even people with such salaries find it hard, considering the high cost of living in recent months,” he said.
In addition, the Reserve Bank of India has tightened lending norms and also hiked interest rates on home loans, as a result of which many buyers have put off their purchase plans.
But builders defend the high realty rates. “Land prices in Mumbai are the costliest in the world and delays in permissions only add to the problem,” said Paras Gundecha, president, Maharashtra Chamber of Housing Industry (MCHI), the apex body of builders.
Sunil Mantri, chairman and managing director, Sunil Mantri Realty Limited, blames the government. “There is hardly any incentive to construct affordable units. Hence builders prefer to cater to the upper sections, from where they can make the maximum profit,” he said.
The MCHI has suggested a three-way formula to tackle the problem. “Higher FSI (Floor Space Index), faster permissions and lower interest rates will automatically reduce the rates,” said Gundecha.