Mumbai:India's financial capital Mumbai witnessed a decline in residential property prices for the first time in a decade previous year following a crackdown on undeclared cash, new consumer protections and the roll-out of a nationwide sales tax, according to Knight Frank.
Homebuyers have a narrow window of opportunity though, because the West Bengal Housing Industry Regulation Bill (HIRA) 2017, already passed by the State Assembly a year ago, is expected to be notified soon.
While in office and commercial sector, new completions are at a decadent low at 71 per cent for developers are diverting resources towards completing residential projects.
Shishir Baijal, Chairman & Managing Director, Knight Frank India said, "2017 was been packed with uncertainty, volatility and long-term promise of new opportunities".
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Das said that "in terms of sales, the Mumbai market recorded 19% uptick in H2 2017 over the demonetisation-hit same period a year ago, however overall sales volumes reflect a declining pattern". According to the report, this drastic dip is a result of lack of proper implementation of RERA rather than any fundamental flaw in the real estate market of the city. The developers also have unsold inventory down by 43 per cent which is due to the restricted launches that have eased inventory pressure, but highlighted the market stress. "Once the RERA get streamlined, the residential market will turn into a consumer-oriented market", the research team said.
"Supply grew 13 per cent to 12.5 million sqft compared to 11.1 million sqft in 2016, and the report blamed the headwinds in the technology sector and supply crunch for this subdued growth".
The Indian property market will continue to face headwinds this year and no hardening of prices is expected, according to Knight Frank.
As per the report new office space supply hit double digits for the first time since 2012, 76% higher YOY. But, in line with the past trends, more than 70% of the new launches came in the affordable housing segment. Home affordability remains the highest in Mumbai at 7.8 times a family's annual income, compared to 11 times annual income in 2010. To further sweeten the deal, the freebies offered by developers take the effective discount on offer to above 12%.
New launches across the eight key metros of Mumbai, Delhi-NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad, declined 41 per cent in the second half of 2017 to 40,832 units from 68,702 units in the same period in 2016.