Property sales across tier I cities in the country have dropped.
While Delhi and its surrounding region witnessed a 20% drop in sale, Chennai, Hyderabad and Mumbai saw 18%, 13% and 2% drops, according to the 2014-15 real estate research survey by Liases Foras. Bangalore is an exception, though.
"Currently, property market has been quite inflated and over-stretched. No one, including end-users and investors, wants to invest his/her money... and that has resulted in decline in property sales," Pankaj Kapoor, MD, Liases Foras, said. "Besides, there is a huge gulf between the current rates and expectations of end-users. They are still waiting for price correction. All things are attributed to the stagnant sales in Mumbai and other cities."
Liases Foras, a non-brokerage firm, is into real estate researches. The survey was released on Thursday.
Kapoor said the change in guard at the Centre has not changed the property market scenario. "The Narendra Modi-led government cannot increase peoples' income overnight. The current property market is beyond the reach of common man. An ineffective market will continue for some time. Despite low sales, developers are not bringing down prices. But they are offering sops such as waiving off stamp duty and registration charges to lure buyers."
Also, the survey says that construction activity has increased in affordable and ultra-luxury segments in Mumbai. Flats that cost less than Rs50 lakh are selling more. Besides, the average prices have gone up in Greater Mumbai and Mumbai metropolitan region. In Greater Mumbai, this year a 2BHK costs Rs2.30 crore. Last year it was Rs2.14 crore... in MMR, a 2BHK flat cost is Rs1.32 crore while it was Rs1.20 crore last year, according to the report.
Manohar Shroff, general secretary of the Maharahstra Chamber of Housing Industry (MCHI), Navi Mumbai, said sales in Mumbai and peripheral regions has been stagnant. "Buyers cannot afford such costly houses. But developers have little choice. The land cost is already high and buyers have to pay various government taxes. If we meticulously calculate, buyers are forced to spend almost 10-15% of total flat cost on stamp duty, registration, valued added tax, service tax etc. To make houses affordable, the government should slash taxes."