At current rate of buying, it will take at least 41 months to dispose off the inventory
The unsold stock of flats in Mumbai Metropolitan Region (MMR) is increasing by the day. This year, 176,666 housing units could not find any buyers, as compared to 146,729 units last year. With the current rate of buying, it will take over 41 months to dispose off this inventory, according to a survey by Liases Foras Real Estate Research Firm.
The survey stated that last one year added 29,730 more unsold units in MMR. As a result, the cost of an average 2-BHK flat has come down – Rs 2.91 crore in Mumbai, against Rs 3 crore in 2014, and Rs 1.33 crore in MMR, against last year's Rs 1.31 crore. Liases Foras managing director Pankaj Kapoor said, "The current stagnant scenario in the real estate market will continue for at least the next two years."
He added that only 46,000 houses were sold in Mumbai this year against a demand of 20 lakh houses. "Despite such a high demand, people are hardly buying their dream house. The Non-Performing Asset will continue to rise, reason being the skyrocketed cost of a house. People cannot afford to buy a house at the current rate. They are preferring to wait for price correction. For investors, however, affordability is not an issue. But they will only put the money in when the market is surging. So the real estate market will remain stagnant for some more time," said Kapoor.
He further said the government was also responsible for this Catch-22 situation. "Due to a rise in ready reckoner rate and premium charges, the project cost is also escalating. Developers want to decrease but there input cost is high, so they feel they do not have a scope to go down any further. In any case, market will wait to raise the income of their respective buyers, besides a decrease in the interest rate," added Kapoor.
Manohar Shroff, general secretary of the Maharashtra Chamber of Housing Industry, admitted there was a glut in the market. "But I am hopeful that the situation will improve once there is clarity regarding housing policy. At present, there is confusion among buyers and developers. If the government wants us to construct and sell property at affordable rates, then they should also reduce taxes and slash premium charges. Buyers have to pay almost 10-15 per cent of tax against the total cost of a property. Besides, they increase its rate each year. Now government rates are the base rate and at most places, they are equal to the market rate," said Shroff.
Meanwhile, buyers remain unsure of which way to go. Rajesh Parab, a suburb resident, had booked a 1-BHK flat in Nalasapora for Rs 23 lakh. "I had some financial problems so I could not buy the flat at the time. But a few days ago, my agent called and said the same flat was available for Rs 21 lakh. It was a pleasant surprise for me. But now I am wondering whether to invest at this rate or wait some more for the cost to decrease," he said.
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