High property prices hit resale of old flats

The steep property rates in the new constructions seem to have played an adverse effect on the resale of flats in the city.

The steep property rates in the new constructions seem to have played an adverse effect on the resale of flats in the city. The reason: Owners of these used flats, who usually upgrade themselves to new constructions, are finding it difficult to find new properties suiting their budgets owning to exorbitant rates quoted by the builders.

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This has forced many to defer sale of their existing properties.

Ram Prasad Padhi, CEO of Mumbai Propertys, a leading real estate brokerage firm, rues the absence of sellers. “We have a huge database of buyers but flat owners are postponing their sales in a big way,” said Padhi.

He added that recently a flat owner at IC Colony in Borivli had refunded a token money on the pretext that there was not a single property in the vicinity where he could shift which suited his budget.

The resale flats market occupies 50% of the sales in the realty sector. In normal course, flat owners tend to sell off the premises and shift to bigger ones in new constructions. However, the recent unprecedented hike in new constructions has dampened their mood.

“Flat owners are adopting a wait-and-watch policy as they expect these rates to come down,” said Harendra Pandya, vice-president, Estate Agents Association of India, an apex body of real estate agents.

Builders say they should not be blamed for the scenario. “The overheads have increased in the last two years and we price according to market conditions,” said Shailesh Sanghvi, director of Sanghvi Builders.

But experts say this disturbs the entire market. “Homebuyers are left in lurch while the government loses revenue,” said Pankaj Kapoor, CEO of Liasas Foras, a real estate research firm.