Residential real estate prices in Mumbai, India’s financial capital, are soaring with the average cost of a property now at an all time high.
The average cost of a flat in the city has increased by 49% over the last year to Rs 1.91 crore, according to figures put together by the real estate research agency Liases Foras.
In comparison, other cities including Bangalore, Hyderabad, Chennai, Pune and the National Capital Region (NCR) have witnessed either a drop in rates or a negligible increase. An average flat in these places is Rs 35 to Rs 50 lakh.
According to Pankaj Kapoor, chief executive officer of Liases Foras, most cities have maintained equilibrium in pricing, ‘Of all the cities, Mumbai is the only one where the prices have escalated so much that no segment can afford it. Most developers here are not bothered about end user sale. If the sale of flats in Mumbai for April to June last year is compared to the same period this year, there is a 50% decline this time around,’ he explained.
Mumbai’s nearest contender is Gurgaon, which also has a highly speculative market with a weighted average flat price of Rs 97 lakh, but unlike Mumbai this price has remained unchanged over the last year.
Also, unlike Mumbai which has well-defined boundaries with no scope for expanding further, most other cities still have enough new land supply along the periphery helping keep the prices under control.
For instance Noida, which has seen the highest price correction, has a lot of new land that has opened up for development recently. Chennai is the most healthy market which has not allowed speculation to come into play at all and has been a purely end-user market, according to the index report.
Kapoor said that though developers in Mumbai have started feeling the pinch there is no imminent sign of them bringing down prices. He reckons a price correction will only happen when one of them suffers more financially.
Figures show that the average cost of a flat in Mumbai is about 100 times more than the average income, According to a 2009 Task Force report prepared by a central government appointed committee, affordable housing has been defined as when the cost of a house doesn’t exceed five times the household gross annual income.
At Rs 1.91 cr, average cost of flat in Mumbai now at all-time high – by Shalini Nair