Home prices dropped for the first time this decade by over 10% in the Mumbai Metropolitan Region (MMR), said a Knight Frank India report (July-December 2017) released on Wednesday.
Samantak Das, chief economist and national director, Knight Frank Research said, “For the first time in this decade, the Mumbai market has experienced a drop in residential prices. The base price has come down by 5%, which combined with other offers, discounts and freebies translates into an effective price benefit of 11-12% for buyers. This includes bouquet of incentives such as waivers on stamp duty, floor rise and assured rental schemes.”
According to the report, the cost of an average house in 2017 was equivalent to 7.8 years of a family’s salary compared to 11years’ salary in 2011. Knight Frank said the affordability benchmark is 4.5 years. “Mumbai is marching towards this benchmark,” it said.
New launches last year also dropped 83% since the peak of 2010. The report said 1,38,613 apartments were launched in 2010; last year, it came down to just 23,253. Sale volumes grew by just 3% in 2017 compared to the previous year.
But annual sales in 2017 saw a considerable drop (62,256) compared to 2010, when 1,08,680 were recorded.
As many as 1,38,652 flats remained unsold in the Mumbai Metropolitan Region. “Home launches in second half of 2017 plummeted by 23% from the previous year as developers’ focus shifted towards completing existing projects,” it said. Value of unsold inventory was pegged at Rs1.31 lakh crore or 6% of Maharashtra’s GDP.
Interestingly, more apartment sales were reported in the last three months of last year (15,265) as compared to 8,416 sales during the same period in 2016 when demonetization was announced.
Locations such as Lower Parel, Worli and Prabhadevi in Central Mumbai were the worst performing markets; it will take more than four years to offload the 4,175 flats in this belt, said the report.
In the western suburbs, there were 19,329 unsold flats in all, but these will take around 34 months to sell, according to the report. Thane, the stretch from Chembur to Mulund and the one from Mira Bhayander to Virar howevr recorded a significant growth in sales over the second half of 2016.