Mumbai property prices: On the verge of coming down?

Here’s something that will cheer the heart of every Mumbaiite looking to buy property: Merrill Lynch predicts thathouse prices could be heading for a sharp fall early next year.

According to the brokerage, the gap between supply and demand widened further, with about 1,700 housing units sold against 3,000 units launched in the July-September quarter. So far, the city has continued to maintain its quarterly average of sales of about 2,000 units, but Merrill Lynch believes Mumbai “will struggle to maintain a similar run-rate from the first quarter of next year if prices do not correct by then.”

[caption id=“attachment_119532” align=“alignright” width=“380” caption=“In September, Mumbai property sale registrations hit a 29-month low. Reuters”]  [/caption]

Still, sales in the December-ending quarter are expected to remain steady because of festival demand.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Barring the expected bump-up in sales in the current quarter, demand for homes in Mumbai has dropped because of a sharp rise in interest rates and high property prices.

According to industry experts, lackluster buyer demand could be seen at the annual exhibition of the Maharashtra Chamber of Housing Industry held in Mumbai earlier this month. “Although a significant number of developers looked in no mood of softening prices, there were some who were happy to offer 5-10 percent discount to genuine buyers. Freebies such as stamp duty inclusions, free parking, furnished kitchen have been in the offering for over a quarter now. We believe this is the beginning of the inevitable correction in prices, which has been temporarily postponed for Diwali,” Merill Lynch noted.

In September, Mumbai property sale registrations hit a 29-month low of 4,137, down 22 percent from a year ago.

 While developers have baulked at reducing house prices so far, several public-sector banks have rushed to offer short-term festival offers on home loans to trigger home buying decisions, according to a Citi report. These include a 35-100 basis point reduction in interest rates and 50-100 percent waivers in processing fees. One hundred basis points make up 1 percentage point.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

Indeed, despite sluggish sales, property prices have risen by nearly 17 percent in the past one year and 8 percent in the past six months, a Business Linestory said, quoting a Nomura Research report.Sales are expected to be sluggish for at least another six months.

For now, the expectation is that the next wave of new launches - expected to happen in February/March - could be priced lower, which could lead to a 15-20 percent cut in prices of existing and ongoing projects.

Of course, we’ve all heard this before - demand is falling and therefore, prices have to come down. The fact is prices haven’t come down so far. So, the question is, how different will things be this time around?