Will 35,000 unsold flats make Mumbai cheaper?

If you thought property prices were high in Mumbai, you will be shocked to know that the value of unsold flats in Mumbai is around Rs 8,535 crore. And this unsold inventory will take at least another three years to clear up. But does this mean that the price of your dream home will come down?

Probably not. According to the latest report by real estate firm Liases Foras around 35,000 units in Mumbai stand unsold while the number of apartments lying unsold in MMR, which include Thane, Navi Mumbai and Raigad has gone up to 1.13 lakh units against 95000 units in January. This means there is 12.9 crore sq ft of inventory lying unsold, the weighted average selling price of which is Rs 10,833 a square foot, the data showed. In 2010-11, 2.66 crore sqft residential stock was lying unsold within the city limits, and 8.17 crore sq ft in the MMR. Still, developers launched more than 100 housing projects in the city last year.

But here’s the bad news. Despite these large numbers, the average cost of a 1,100 -1600 sq feet house in MMR, comprising Mumbai, Thane, Navi Mumbai, Kalyan-Dombivli, Vasai-Virar and Mira Road-Bhayander, is still high at Rs 1.12 crore. These include ready to move-in flats as well as those under construction. And it is this unaffordable pricing which has ensured the build up of inventory. But not just MMR, the average cost of a house in Mumbai- from Colaba to Mulund, Dahisar and Mankhurd - has also increased 20 percent from Rs 2.18 crore in the last financial year to Rs 2.6 crore now.

What’s interesting is Mumbai’s comparison with other cities. Apart from Delhi and Bangalore, even Pune is selling more flats than Mumbai. While Delhi sold a record 30.99 million square feet, Bangalore followed at 10.55 million sq feet. Pune came in at third spot with sales of 9.40 million sq feet, followed by Mumbai at 9.13 million sq feet.

Prices climbed 3 percent in Bangalore while Chennai recorded a 5 percent increase. Hyderabad posted a record decline in sales, dropping 57 percent to 2.64 million square feet, Liases Foras’ data showed.