Real Estate Update: New launches growth in Mumbai falls from 220% to 22%;
The real estate market doesn’t seem to pick its lost pieces, and the ground still seems shaky. Knight Frank India has come out with a report on a comprehensive analysis of the residential and office market performance across eight cities for the period January – June 2019 (H1 2019), which shows that the housing units sold ( In Mumbai) saw an increase of 4% in H1 2019 to 33,731 from 32,412 in H1 2018. The report findings establish that the number of residential launches in Mumbai increased by 22% in H1 2019 to 43,822 from 35,874 in H1 2018.
What seems to be still a disturbing factor is that on account of launches being higher than the sales, the unsold inventory levels in MMR have inched up 14% YoY to 136,525 units during H1 2019. Also, the prices don’t look to have been corrected as much as the buyers would have expected. The weighted average price for MMR was down 3% YoY during H1 2019. The prices have updated by 12% from the peak of H2 2016.
Some residential market highlights of Mumbai city:
The launch’s growth tapers to 22% year-on-year (YoY) during H1 2019, after registering a stellar 220% YoY growth in 2018. 62% of the launches during H1 2019 were in the sub-Rs 75 lakh ticket size, and 82% were below Rs 1 crore ticket size. Thane market witnessed the most significant quantum of new launches on account of new projects. During H1 2019, sales in MMR grew marginally by 4% YoY to 33,371 units. Sales in H1 2019 were affected by two significant events- GST ambiguity and election uncertainty. Affordable houses continued to drive sales in H1 2019, relatively inexpensive MMR – Thane, Peripheral markets. Central Suburbs and Peripheral Western Suburbs combined grew by 6% YoY during H1 2019. However, sales in the pricier BMC markets grew only by 3% YoY in the same period.
With RERA in place, the trust between the builders and the buyers still needs to grow. Banks have yet to transmit the benefit of repo rate cut to the home loan takers as the transmission has been marginal. Of the 75 basis points repo rate cut by RBI, the banks would have passed 10-30 basis points to the home loan takers. In addition, the GST continues to play the spoilsport as most developers have opted for an earlier GST regime for 12% with ITC for ongoing projects. With the NBFC crisis still on, the liquidity crunch will increase their cost of funds and thus impact buyer interest.
Builders and real estate developers, on their part, are offering freebies, discounts, and deals to the new buyers in the form of ‘No floor rise, no stamp duty, two years maintenance-free period, no clubhouse charges, two years assured rentals schemes, various subvention schemes, deferred payment plans, etc. Also, earlier subvention schemes and deferred payment plans were available only in under-construction projects, but now it is available in a few OC ready projects.
Until Rera projects start delivering in the promised time frame and the home loan interest falls below 7 percent in the current scenario, the buyer interest in the market will take its time.
In most cases, for-sale-by-owner properties cannot be directly added to an MLS and CIE, typically maintained by REALTOR associations. The lack of a managed centralized database can make these properties more difficult to locate. Traditionally, these properties are found by driving around or looking for ads in the local newspaper’s real estate listings. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Website in the geographic area.
What is a REALTOR? Sometimes the terms real estate agent and REALTOR are used interchangeably; however, they are not the same. A REALTOR is a licensed real estate agent who is also a member of the NATIONAL ASSOCIATION OF REALTORS. REALTORS are required to comply with a strict code of ethics and conduct.
MLS and CIE property listing information were historically only available in hard copy, and as we mentioned, only directly available to real estate agents members of an MLS or CIE. About ten years ago, this valuable property information started to trickle out to the Internet. This trickle is now a flood!