Minimal drop in property sale in Mumbai

Even as Delhi and its surrounding region witnessed a 20% drop in sale, Mumbai saw marginal drop at just 2 per cent while Chennai and Hyderabad and Mumbai saw 18% and 13%, according to the 2014-15 real estate research survey by Liases Foras. Liases Foras, a non-brokerage firm, is into real estate researches. The survey was released on Thursday. It says that property sales across tier I cities in the country have dropped.  Proving that change in guard at the Centre has not changed the property market scenario.

The survey says that construction activity has increased in affordable and ultra-luxury segments in Mumbai. Flats that cost less than Rs50 lakh are selling more. Besides, the average prices have gone up in Greater Mumbai and Mumbai metropolitan region. In Greater Mumbai, this year a 2BHK costs Rs2.30 crore. Last year it was Rs2.14 crore… in MMR, a 2BHK flat cost is Rs1.32 crore while it was Rs1.20 crore last year, according to the report.

According to Pankaj Kapoor, MD, Liases Foras, “Currently, property market has been quite inflated and over-stretched. No one, including end-users and investors, wants to invest his/her money… and that has resulted in decline in property sales” . “Besides, there is a huge gulf between the current rates and expectations of end-users. They are still waiting for price correction. All things are attributed to the stagnant sales in Mumbai and other cities,” he told a newspaper. “Buyers cannot afford such costly houses. But developers have little choice. The land cost is already high and buyers have to pay various government taxes. If we meticulously calculate, buyers are forced to spend almost 10-15% of total flat cost on stamp duty, registration, valued added tax, service tax etc. To make houses affordable, the government should slash taxes,” Manohar Shroff, general secretary of the Maharahstra Chamber of Housing Industry (MCHI) demanded.

The Narendra Modi-led government cannot increase peoples’ income overnight. The current property market is beyond the reach of common man. An ineffective market will continue for some time. Despite low sales, developers are not bringing down prices. But they are offering sops such as waiving off stamp duty and registration charges to lure buyers.