The sales of residential buildings are dropping, and fast. Past seven month’s data gleaned from the stamp duty and registration department showed that the trend in the eastern suburbs (Kurla to Mulund) has been the worst, with a record 33% slide in the number of documents registered in 2011, compared to that in 2010.
From January 2011 to July 2011, 7,529 papers were registered, while 11,371 were sealed between January 2010 and July 2010. The western suburbs seem to have fared slightly better with deals between Goregaon and Dahisar sliding by 19%. Borivli taluka recorded the registration of 13,554 documents from January 2011 to July 2011, compared to 16,846 for the same period last year.
“The drop in demand seems to be the fallout of soaring prices of houses and high interest rates,” said Rajesh Mehta of Raha Realtors. The sales volume is expected to drop further as India’s central bank, which has increased rates 11 times since March 2010, might add half a point to the benchmark borrowing cost by the year-end, says an expert.
South Mumbai realty market—usually the last to be affected— has recorded the most visible drop of 32% and 44% in June and July. The island city registered 777 documents in June 2011, while 1,148 papers were signed in June 2010; 788 documents were registered in July 2011, against 1,409 in July last year. The total decrease in the past seven months has been 13%.
“The market has been thrown offbalance. Developers will take at least 72 months to sell the unsold houses. And for that, they will have to lower the prices,” said Pankaj Kapoor, founder of Liases Foras, a real estate research firm. The city’s unsold inventory climbed to 40 months. Unsold inventory includes ready, residential flats under construction and being marketed.
Unsold stock climbed to 108 million sq ft, while the weighted average price of homes increased to Rs 9,716 per sq ft.