Having gone through a downturn, property prices seem to have finally bottomed out in most of the top cities in India, including the Mumbai Metropolitan Region (MMR), as they remained more or less stagnant since the last five years. Before COVID-19 gripped Indian cities, it was widely anticipated that average property prices would finally see some increase in 2020, but the pandemic derailed this probability.
Instead, some developers are giving further discounts and offers to attract buyers to overcome issues of inventory pile-up, cost overruns, among others. It’s almost as if the festive season has come early. Hence, there couldn’t be a better time than ‘now’ to purchase a property, provided the buyer’s financial health is strong.
As per ANAROCK research, the average property prices in MMR as on Q2 2020 are Rs 10,610 per sq. ft. Back in 2015, the average prices stood at Rs 10,280 per sq. ft. – increasing by merely 4% in five years. Considering the rate of inflation in this period, there would be negative growth.
Keeping these facts in mind, some industry experts believe that the residential real estate prices in Mumbai might have bottomed out during the Covid pandemic, and consequently, demand for property will exceed supply in the next few years.
When asked about this, Anuj Puri, Chairman, ANAROCK Property Consultants, said, “As for demand exceeding supply is concerned, yes, there is a high possibility that we may see this trend in the years to come. This is largely because unlike the previous years, developers have now considerably restricted new supply into the market. Additionally, their products are much in line with homebuyer demand and hence the gap between the two has considerably reduced over the past few years. Going forward, if the trend continues and developers remain laser-focused in launching minimal new supply into the market, demand will eventually outstrip supply.”
ANAROCK data reveals that between 2013 and 2016-end, MMR saw new launches of more than 4.16 lakh units whereas in the period within 2017 to Q2 2020, new supply was less than half at 2.02 lakh units. This clearly indicates that new supply has been restricted considerably in the last few years.
(Source: Financial Times)