Property prices in Mumbai drops by 7.2%
Mumbai Real Estate Sector, a strong seller’s market has started showing some signs of turning in favor of buyers. The latest Makaan.com Property Index (MPI) for the month June 2012, which was released today, indicates an initial softening in property rates in major real estate market in India including Mumbai. Home buyers had adopted a wait and watch approach for a longer duration owing to high property rates & an even higher home loan interest rates. This reduced the volume of property transactions considerably leading to an increase in unsold inventory in the market. The real estate Mumbai property index for June 2012 stood at 1459 compared with 1572 in the month of June 2011. The Mumbai property index indicates a drop of 3.8%. The MPI figure was at 1459 in June 2012 compared to 1516 in March this year, indicating stability over the quarter.
As per the June 2012 MPI, the national index dropped from 1486 in June 2011 to 1446 in June 2012, signifing a softening of 3% in national residential property prices. The reduction is louder, if one looks at the city wise analysis. Cities with maximum price reduction over last 12 months are Hyderabad (-26%), Chandigarh (-20%) and Ahmedabad (-11%). Problems in Hyderabad are political and sentiment driven which creates volatility in the property prices. Chandigarh and Ahmedabad experienced new project launches at a significantly higher value compared to the prevailing market prices (during the June-October 2011 period) last year which took the property prices higher. These new launches caused a temporary mismatch in the demand-supply equation in these two markets. The situation has become better in the more recent past. Other real estate markets are also showing some sign of fatigue. The softening of prices is evident in markets of Chennai (-7%), Mumbai (-7%) and Bangalore (-5%). The coming 4-5 months (in the run up to the festive season) will be extremely crucial for the real estate industry. Giving support to the Makaan index were the property price movements in cities of Kolkata, Pune and Delhi NCR that rose by 25%, 16% and 4% respectively over last one year.