Average Mumbai flat still costs Rs 1.3 cr even though unsold inventory is as high as 4 years

Property prices in the Mumbai Metropolitan Region (MMR) dropped by the maximum among leading metros during the quarter ended 31 March 2015 as unsold inventory in the island city has risen to 46 months ( almost four years!). Weighted average price per square foot has seen a 2.10 percent decline, according to the report by Liases Foras, a property research and consultancy firm. The average price per square foot has fallen to Rs  12, 835 in the fourth quarter of the financial year 2014-2015 from Rs Rs 13,121 in the previous quarter. But despite this decrease  in per square foot cost, the weighted average price of a new house in MMR continues to be atrociously steep at Rs 1.29 crore ( down from Rs 1.32 crore in the previous quarter) while it is Rs 2.95 crore within Mumbai municipal limits. Hence it’s not surprising that the maximum inventory is for flats that cost upwards of Rs 2 crore. A whopping  6.88 lakh  flats in the January-March quarter remained unsold in the top six cities of India despite banks making much ado about easing home loan rates. The National Capital Region has witnessed the worst quarter with sales falling 27 percent on quarter and inventory rising to a whopping 71 months or nearly six years. A healthy market maintains an inventory level of eight to 12 months. The Liases Foras report further said that  home prices remained stagnant in the National Capital Region, Chennai and Hyderabad and rose 1 percent in Pune and Bangalore over the same period.  Meanwhile, home sales in the top six cities of India rose 2% sequentially in the quarter to March but were down 8% over the year ago period. NCR saw the biggest fall in sales at 37 percent in the last year while sales in Mumbai have actually risen by 8 percent during the same period. During the quarter, 35 percent of the sales  occurred  in the cost bracket of Rs 50 lakh to Rs 1 crore followed by the cost bracket of Rs 25 lac to Rs 50 lac with 30% sales. Data: Liases Foras “The exuberance in the market has gone away and price correction is the only way to bring demand back in the market,” said Pankaj Kapoor, managing director, Liases Foras. According to Kapoor neither the buyers nor the builders are willing to budge. While buyers find the prices too high, builders are holding on to their high prices and flooding the market with a flurry of new project launches, and tring to sweeten their offers with several new schemes. ( Read more about that here ) “Mumbai, for instance, witnessed historic new launches with 18.16 million square feet of new launches during the quarter gone by. “This was the second highest new lunches in a Qtr in MMR. The highest new launches so far were during the first quarter of 2010-11,” said Kapoor. But as Firstpost has said in the past, buyers should not fall for these offers since these schemes just give the builder some liquidity at the buyer’s expense. And, since they are all stuck with unsold stocks, the chances are they will use your money as working capital and delay delivering your project.