This is Mumbai's real estate problem

Home buyers will have to shell out more for their dream home. Why? A month ago, the Maharashtra government revamped the Development Control Regulations (DCR) to increase transparency in real estate transactions, but reports show that these guidelines mean higher construction costs and developers claim that they have no choice but to pass on these high prices to customers.

Developers that are already struggling with poor sales are likely to face further project launches with the new guidelines that require them to further increase input costs. But with interest rates likely to ease this year, demand for properties will rise again and builders will pass on this burden to home buyers, who will end up shelling out more for their dream home.

Realty majors like Oberoi Realty are in a tight spot. The company recently hiked prices by 11 percent at its Goregaon project in Mumbai despite sales falling 33 percent. Others, who have lesser cash in hand, are bracing themselves for more pressure on margins.

According to a Business Standard report , an estimated Rs 7,800 crore of big-ticket property deals have not moved forward due to sluggish sales and liquidity concerns. With the new rules in place, the delays will only get worse.

Godrej Properties said in a statement that increasing land and construction costs along with manpower shortage have impacted margins.

The new FSI regulations will also mean that developers have to rework specifications on projects that are already underway and analysts say builders with half-completed projects will lose around 7 percent of their saleable area.

Watch the full report on CNBC TV 18: