Unaffordability continues to be reason for decline in home sales in the city with developers refusing to lower prices in a stagnant real estate market. Further, Mumbai is among the top five metros to have witnessed a slowdown in the sale of homes in the July-September quarter.
While there has been a significant increase in inventory levels across India in the same quarter for the 2013-14 financial year, the inventory pile-up in the Mumbai Metropolitan Region (MMR) was the highest at 58 months, according to a report by Liases Foras, a real estate consulting firm.
A ‘months inventory’ reflects the number of months required to clear the stock of residential units at the existing absorption rate. A healthy market maintains an eight to 12-month inventory level.
“The months inventory levels are at the highest during the second quarter. These levels have not been seen during the past five to 10 years, reflecting a very poor market for residential units,” said Pankaj Kapoor, managing director of Liases Foras, adding that a typical middle-class and above middle-class citizen, who earns about Rs 80,000 to Rs 1.5 lakh a month, has been unable to afford a home in the city.
The weighted average cost per flat is at Rs 1.23 crore in Mumbai, while the weighted average price stands at Rs 11,878 per sq ft.
“There is demand for housing and people want to buy at the right price, but the current rates are exceptionally high and developers are unable to cut down prices beyond a certain level,” said Kapoor.
According to the report, the sold properties during the quarter comprise about five per cent of the total unsold stock and inventory in the city. Developers, however, have repeatedly tried to woo customers by offering freebies and discounts in the past few months. From gold coins, flat discounts, payment of stamp duty and other registration charges by developers to free parking, home buyers were being flooded with schemes by developers.