Residential Real Estate Prices to Reduce as Inventory Pile Up

According to a report by JLL, prices of residential properties are set to fall drastically because of unsold flats or rising inventories across metros. Metro cities like Delhi, Mumbai and Bengaluru are recording highest number of unsold flats. Mumbai is sitting on inventory of 48 months. Delhi real estate is around 23 months and in Bengaluru the inventory levels are sitting for 25 months. Global brokerage Nomura said that the acceptable levels of inventories are for around 14-15 months.
With such kind of inventory lying unsold, it is difficult to stick to the current prices owing to which the cut on property prices are expected.

Sanjay Dutt, Executive Managing Director of South Asia at Cushman & Wakefield told that the in big Indian cities the prices would fall 10% and in outskirts of large cities it may witness a fall of 15%. There could be sharp price correction between now and Gudi Padwa (an auspicious day to buy real estate property in the month of March every year).

The inventory levels are high in the suburb like Virar and Panvel  in Mumbai, and in areas like Thane and Mira Road, prices may not go down but can rise as there is no inventory lying unsold there. All the projects launched are getting good responses in these two places, says Mr Vyomesh Vimal Shah of Hubtown, largest developers of Mumbai.

Based on the latest survey by JLL, the housing prices in India are unsustainable and it is belied that a property bubble is in making.  According to RBI, the property prices pace have moderated and this is due to the slower increase in property prices in metro cities.

The home sales have not been that good despite the lucrative offers by the realty developers, and the main reason is attributed to the high prices. But developers like DLF believe that the property prices will go northward because of the recently passed land acquisition bill and the new guidelines set by the Central Bank to do away with the certain home loan schemes.