Realty report on six cities in country; Mumbai has witnessed rising property prices, declining sales volumes in the last two years.
Mumbai is fast becoming a real estate nightmare. “The residential market has witnessed a phenomenon of rising property prices and declining sales volumes. High prices coupled with a stagnating job market have adversely impacted sales momentum. Going forward, the price growth in Mumbai will be muted on account of the unsold inventory and increasing share of peripheral markets,” says a just-released report by Knight Frank India recently.
The report, an Economy and Realty Report for December 2012, focusses on the Indian residential market scenario and the performance of the top six cities in the residential space. As per the report, “GDP growth declines from 9.3 per cent to 6.5 per cent, crippling the residential sector, launches declined by 30 per cent in 2012 compared to seven per cent in 2011 as banks’ credit exposure to developer’s falls from 23.21 per cent to mere 3.88 per cent.”
Further, the report notes that, “The residential market in 2012 was plagued by high property prices, relatively higher mortgage rates, weak business sentiments and a bleak employment scenario which is reflected in the residential launches, which declined by 30 per cent in 2012 in comparison to a fall of 7 per cent in 2011. Banks’ credit exposure to developers has fallen from its peak growth rate of 23.21 per cent in Jun-2011 to 3.88 per cent as per the latest reported data on September 2012.”
It turns out that developers are cautious of launching projects as the gap between the launch and the absorption numbers reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011 respectively. Meanwhile, on the other big market, Delhi-NCR, the report states, “Increase in supply in the NCR will primarily emanate from the opening up of new sectors in the Gurgaon market. Gurgaon, Noida and Greater Noida will continue to lead the overall NCR residential market. However, controlled new supply will keep a check on the quantum of unsold inventory. As a result we expect the NCR residential market to stabilise in 2013.”