India’s financial capital Mumbai has witnessed a whopping 87% increase in property prices in the last four years, while neighbouring Pune has seen a rise of 63%.
According to the recent economic survey report, property prices in other larger cities have gone up by 43% to 166%. This situation in the real estate sector is worsening day by day mainly due to the absence of a regulating authority. It was worse in Mumbai, which is ranked third as the most promising investments markets.
The report stated that the cost of land in Mumbai is sky rocketing as very few land is available to accommodate the daily influx of migrants. Scarcity of land is the major problem to construct affordable housing for people, leading to the vertical growth of slums, the report said.
National Housing Bank, which conducted a nationwide survey to know the trend of pricing policy in the real estate sector, has found that Chennai ranked first. In the last four years, property prices in Chennai have gone up by 166%. Bhopal is second with a hike of 117%. Comparatively, the rates in Mumbai and Delhi have increased slowly. In Mumbai, the property prices have gone up by 87%.
According to the report, property prices in Mumbai are going up due to the expanding infrastructure in the city. Upcoming projects like the metro, monorail and the new international airport in Navi Mumbai have contributed to the inflated real estate price in the Maximum City.
One of the major reasons for price hike is the rental housing market, which is very unorganised. Renting a house in Mumbai is a very difficult task. In India around 11% people used to rent a flat, while the percentage for Mumbai is 27 %. There is a shortage of 3.72 million houses in Maharashtra. Over 90% of this demand is in the 300-800 sq ft size category (defined as EWS and LIG).
Pranay Vakil, chairman of Knight Frank Pvt Ltd, said the report is selectively true about the real estate segment in Mumbai. “Simple principle of the market is either supply has to come up or the connectivity has to come up but we are poor in both that’s why the prices are growing up day by day,” Vakil said.