Elusive home buyers, at least some of them, are finally returning to the Mumbai property market. Direct discounts of 5-10 per cent, reduction in apartment sizes and falling interest rates have pushed cumulative residential property sales in the last four quarters by 28 per cent compared with the corresponding period, showed a JLL India report.
“This is a congruence of factors -interest rates are dropping, developers are willing to offer discounts and freebies such as subvention schemes, sizes of apartments dropping making it more affordable, buyers believing that markets have bottomed out and an overall marginal improvement in consumer confidence,” said Ramesh Nair, COO, JLL India.
However, as of now, the trend is evident only in few new launches while the broad market continues to wait for a revival. Local property brokers are also not convinced with these numbers, stating that the market continues to be sluggish and these numbers may not reflect an improvement in end-user sentiments.
“Resale segment is seeing thin volumes. Even in primary market or new launches, financial institutions are underwriting inventories. In addition, we also have last year’s low base effect reflecting an inflated growth number,” said Yashwant Dalal, president, Estate Agents Association of India.
According to JLL India, developers in Mumbai have managed to sell 16,990 units under new launches or in primary market in the last four quarters ending September 30 as against 13,290 apartments in the previous four quarters.
While this is an improvement in the otherwise lacklustre market, it has not eased the pressure on developers. Given the weak pricing and oversupply in the market, builders are shying away from launching new projects.New launches during the first six months of 2015 declined 26 per cent from a year ago. According to brokers, builders would rather prefer to hold supply or construction than reduce prices and incur losses. Also, developers have been maintaining affordability of apartments by reducing the average apartment sizes in the city by roughly 6 per cent annually.
Market experts including JLL India do not expect housing prices rising for the next two-three years as builders continue to focus on clearing their inventory. Having realised that a price correction of sorts has already happened, given that the capital values have not gone up in the last two-three years despite an annual inflation of 5-8 per cent, fence-sitters have started taking calls on purchases, JLL India said.