Mumbai to witness drop in property prices; opposite expected in Gurgaon
Property prices in Mumbai are forecasted to come down due to factors like high prices, lower demand and liquidity issues. Also, at the same time due to no new launches in Gurgaon, prices may go up, as per a report by Bank of America Merill Lynch.
As per reports, in last ten years, property prices in Mumbai have appreciated by 14% and the most affordable property in Mumbai at that time was sold at Rs 10000 per sq ft. This means for a 2BHK apartment, the price will be at least Rs 1.5 crore.
Prices of properties in Mumbai have to come down a bit as this trend is unsustainable and after correction should remain for next 2-3 years. With price correction, the residential prices will match up with the income level and there will be an improvement in affordability as well.
Builders, who are unable to sell the properties at current prices are cutting the rates off to lure more buyers for cheaper homes. Several discount schemes and freebies are on offer by builders. Many schemes like 20:80 schemes, stamp duty waivers, floor rise waivers and other discounts are made to attract buyers.
Due to average market prices, many new properties that have been launched were given with discounts. Projects announced by L&T and Lodha witnessed robust sales in the 1st quarter of Financial year 2013 due to this strategy. Many first time buyers were attracted by schemes of Lodha because of the smaller-sized apartments on offer in their new Lower Parel project that brought down the ticket size significantly.
Also, as per real estate firm Liases Foras, price correction has already taken place as resale apartments are being offered at minimum 15-20 percent below the market price.
On the other hand, in Gurgaon, there has been no new launches in recent times due to high prices as land supply is constrained. The demand and absorption rates may be slowing down in Gurgaon but it is still the highest in the country among all the major cities. Average pricing has increased by almost 4.5%.
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