A Dheeraj Housing project in Santacruz (west) that had touched Rs. 7,800 last year per sq ft has come down to Rs. 7,200 per sq ft.
Raja Builders in Khar (west) near the station, that had priced a project at Rs. 12,000-13,000 per sq ft has marginally cut the rate to Rs. 11,500 per sq ft.
These are some of Mumbai’s first price cuts after property prices began spiralling in 2004. After the property market crash in 1995, realty prices continued to decline till 2003. Even without a property market crash, a softening of prices is clearly visible.
While builders are mum about the gradual slowdown, property consultants agree that business has been clearly hit. Property consultants and developers agree that the sudden leap in home loan rates, which have now touched 12 per cent, has led to a drastic dip in sales in recent months. This has led builders to correct prices, ensuring no further rise.
“The consistently high property rates and now high home loan rates have created panic among buyers. I have not closed a single transaction since March. Builders have no choice but to either slash or keep the prices stable to encourage demand,” said Arvind Bhanushali, a property consultant in the central suburbs.
Consultants in brokerage firm Trammel Crow Meghraj (TCM) said that besides home loan rates, the demand-supply dynamics will force correction in prices. In 2006, the demand clearly outstripped supply as very few projects came into the market both in south and suburban Mumbai. Cut to 2007, demand is clearly falling and supply has started rising it is expected to pick up post-July 2007.
“Prices will be revised in the 10-15 per cent range as builders will be in a rush to clear their stock. With demand falling, they will have to correct prices. Areas such as Malad, Mulund and Thane, which had witnessed the sharpest price escalation, will have the first round of price correction,” said consultants in TCM.
In the western suburbs, between Andheri and Kandivli, there has been no perceptible fall but prices have plateaued.
Saying that the slowdown has started, Andheri-based broker Nizam Khan added: “But, real correction in prices is yet to happen.”
Nainesh Shah, executive director of Everest Developers, said price correction would be localised. “The extent of correction would depend on the supply available in a particular area. Interest rates have temporarily squeezed out demand but if there is no supply, how is there going to be a price correction?”
The property story for south Mumbai is quite different though. While there is little evidence of any fall in prices, there is a perceptible lull in property deals.
Property consultant S G Maheshwari said limited stock has drastically brought down sales. “Sales have been affected by other factors like only large format flats above 5,000 sq ft are available. The new trend of sale ‘only by invitation’ has also been a dampener.”