In the last couple of years, Mumbai real estate had drastically slowed down. The increasing demand, sky high property prices, and the lack of upswing in income caused Mumbai real estate to take a direct hit.
But now the economy is beginning to pick up and Mumbai real estate finally has something to cheer about. As compared to last year, property sales have gone up by almost 28% in the last four quarters this year.
Land is scarce and developers are plenty, hence property was being developed at a rapid pace, but there were no customers to buy it and inventory kept piling up. But in the last year, people who were on the fence about investing in a property in Mumbai have realized that capital values are stagnated at the moment and hence many have gone ahead with the decision to make a purchase. For the last two to three years, the capital values stayed constant in spite of an increase in land and construction costs and a 5-8% increase in inflation. With statistics like this, it seems like the ideal time to buy a home in Mumbai.
But those who are waiting for the prices to go down should not have high hopes as this seems to be a rather unlikely event. Considering the land and construction costs as well as the developers’ margins and profits, the chance of prices on homes reducing is very small.
Many interested home buyers have made the link and have recognized that this may be the maximum potential for price correction with regards to Mumbai real estate.
However to push the remaining inventory, there have been other changes noticed. These include discount pricing and offers from developers and builders, reduction in apartment sizes and lower interest rates which are propelling the sales once again. However the number of new launches has drastically reduced and the focus still remains to clear up pending inventory before commencing development of new projects.
But for a city that was hungry for real estate demand for the last few years, even the smallest sign of real estate purchase comes as good news. The last four quarters up till September saw the sale of 16,990 units as compared to the 13,290 units sold in the previous year.
The progress might be slow, but the Mumbai real estate market is surely picking up. Even if it is a gradual increase, the property market is finally beginning to recover.