Mumbai's real estate market is going through a major slump. Just 4,611 apartment sales were registered in August, according to a report released by Prabhudas Lilladher, a leading financial firm. This is the lowest figure recorded in the last 27 months. In comparison, 5,763 sales were registered in August 2010.
The sales were low in July (5,047) as well, and the outlook for September does not look very promising, according to the report. Sales did not pick up during the Ganesh festival earlier this month, and hopes are now fixed on the approaching Diwali season.
Two reasons have been cited for the decline - lack of price correction and a hike in the interest rates on home loans.
Real estate prices have touched exorbitant levels in the past few months; hardly any apartment is available in the city for less than Rs 1 crore. In addition, banks have increased interest rates on home loans and also tightened lending norms, forcing many buyers to put off buying plans.
According to Pranab Datta, vice chairman and managing director, Knight Frank India Limited, the sentiments are loaded against sales. "The builders are not ready to reduce their prices, while consumers are waiting for a correction," he said.
Even builders agree that weak sentiments have dented the sales market.
"The atmosphere is just not conducive, as interest rates have peaked, there is no new supply of housing stock and, besides, the prices are high," said Pujit Aggarwal, CEO and managing director, Orbit Corporation.