Property Sales in Mumbai Fall to 30 Month Low
03 August 2011
Residential property sales in Mumbai have fallen to a 30 month low which is thought to be due to higher interest rates and the current high price of homes which is dampening demand. It is the most expensive city in India, and sales here have fallen 11% when compared to the previous quarter, while the number of homes on the market is also at a record high.
The central bank in India has increased interest rates 11 times since March last year, with further rises being forecast by the end of this year, and the knock-on effect of this is that land prices could drop by up to 30% as developers struggle to pay higher borrowing costs. The number of sales in Mumbai has now declined for 11 months in a row, and as there haven't been any real price corrections yet, many buyers are choosing to wait and see what happens.
However the reverse is true in South Mumbai, which is home to the rich and famous who are now choosing to snap up colonial style bungalows at vast prices, as a home in this area is considered a status symbol, and they do not care about paying over the odds.
The current inventory of unsold homes in the city is now at 40 months whereas a healthy market should contain just 8 to 10 months’ supply. Apparently this means that there is 108 million square feet of unsold residential property, while the average price has now risen to a record $220 per square foot. It's not just Mumbai being affected, as sales in Delhi and nearby areas have also declined by 19%, with unsold property totalling a massive 220 million square feet.