With real estate prices rising to exorbitant heights, the realty market continues to remain stagnant as sales of apartments in the city and its adjoining areas recorded the lowest figures in the last two years.
According to the report prepared by Liasas Foras, a leading real estate research firm, sales in the first three months (January-March) of this year dropped to 9,000 from 10,500 recorded in the months of October to December 2010 in the Mumbai Metropolitan (MMR) Region, which includes Mumbai, Thane, Navi Mumbai and Raigad.
Speaking to the Hindustan Times, Pankaj Kapoor, CEO, Liasas Foras, blamed builders for playing a major role in the crises. “The builders have escalated realty prices to such high levels that buying has become unaffordable to the majority of the population,” he added. He said reduction in flat prices was inevitable in the coming days. “They will do that when their holding capacity gets exhausted,” Kapoor said.
Another factor that has contributed to low sales is the home loan market, where banks have tightened lending norms and also hiked interest rates. “Obtaining a loan, especially after the tightening of rules, has now become a major hurdle for homebuyers,” said Naresh Chheda, managing director, Happy Home Group, a leading group in redevelopment projects in the city.
He said liberal lending norms would improve the market and also bring significant benefits to both buyers and the state exchequer.
Though builders agree about the low sales, they rule out any significant price cuts. “We operate according to market dynamics and in the current scenario almost everything, like land prices, material as well as taxes, have gone up substantially,” said Anand Gupta, secretary, Builders Association of India (BAI), the apex body of builders.
He said price cuts would be barely 5-7% in some pockets across the city. Chheda attributes the poor sales to a large pool of homebuyers who are sitting on the fence. “They are waiting for prices to come down and are hence deferring buying,” Chheda said.