The property prices in Mumbai, one of the highest in the world, are expected to be stagnant for the next couple of months.
Besides huge inventory, a slew of launches in Mumbai and its suburbs after a long gap is expected to have a cooling effect on home prices.
A dozen of new launches by the likes of Oberoi Realty, Lodha Group, Runwal have taken place in Mumbai in the last one month.
In the April-September period, the number of new launches in Mumbai Metropolitan Region (MMR) was down 51%.
According to property consultants, Mulund, a suburb on the Central line, has over 10 million square feet of residential properties on sale in 2015.
Though a recent launch of Oberoi Realty in Mulund has done well - it sold over 275 units out of 550 units on the launch day - realty experts say the Mumbai market is yet to see a revival.
“Investors are withdrawing from the market as they do not foresee prices doubling in the next three to four years. For end users, affordability is not there… New supply will pose a challenge for developers. That is why I think prices will stay where they are or correct,” said Amit Bhagat, CEO and managing director at ASK Property Investment Advisors, a Mumbai-based fund manager.
Pankaj Kapoor, chief executive of realty rating and research firm, said: “A few developers have launched new projects but sales are sub-optimum and inventory levels are high at overall level.”
The real estate inventory — the number of months required to clear the existing stock at the prevalent absorption rate — during this period rose to 83 months in the NCR (national capital region) and 50 months in MMR.
“Price growth has retarded in Mumbai real estate. Prices have gone up just 6-7% in the last one year,” said Kapoor.
According to the CEO of US-based consultant, who did not want to be named, launches are happening in areas which do not have high demand.
“There is high demand for properties in Bandra to Andheri on western line and Dadar to Ghatkopar in Central line but these suburbs are seeing very few launches,” he said.
However, the status quo on prices are a boon for home buyers as they are already paying higher prices due to recent increase in ready reckoner rates, which is the basis for calculation of stamp duty and registration charges. Maharashtra government increased the ready reckoner rates by 5 to 20% from January 1, 2015.