The average residential property prices in Mumbai and suburbs saw a modest year-on-year appreciation of 3.3 % in 2015 against 7% in the year-ago period, according to real estate research consultancy firm JLL India.
The price rise for housing properties was expected to be in the range of 6-7% in 2015.
“The forecasted increase in residential property prices in 2016 is 6%. A sign of any residential market’s increasing maturity is evidenced by a gentler price appreciation—a process which has been very much in evidence in the country’s financial capital,” the report said.
Unlike during the period before the global financial crisis—when prices saw double-digit year-on-year growth across the city and suburbs—the market has seen a rather subdued growth in prices over the last couple of years.
According to the report, this demonstrates Mumbai’s maturing residential real estate market and brings in good news for scores of end-users who wish to own a house in the city that has India’s priciest real estate.
Indeed, factors such as a modest increase in prices, new launches at lower price points and flexible payment schemes have managed to pull fence-sitters to the market, especially in Mumbai. As reported by VCCircle, the city seems to be pulling out of a slump with a pick-up in sales momentum in Rs 1-3 crore bracket. The momentum is being led by pedigreed developers with better track record on delivery and corporate governance.
According to the JLL report, south-central Mumbai and the eastern suburbs saw the maximum appreciation at 4.3% and 4%, respectively, followed by north Mumbai and western suburbs at 3.9% and 3.5%, respectively.
Outside the city and suburbs, Thane saw a 3% appreciation in capital values, while the figure for Navi Mumbai stood at 6%.
However, the report cautioned that it does not mean that Navi Mumbai is doing better than Mumbai—there is a lot of unsold inventory in many of its pockets. It is only in select precincts that Navi Mumbai is witnessing good demand.
It further said 2015 figures also reflect how developers have shown unprecedented flexibility and kept costs stable by absorbing some of the increased holding costs. Some home buyers reciprocated by jumping the fence and buying houses at attractive prices.
Moreover, developers started to gauge market dynamics with greater precision and adapted their product offerings as per the changing demand. Smaller units have been in demand lately due to their relatively affordable ticket sizes and many builders are now offering them even in premium locations. Given the rather sluggish demand for larger homes as they are not affordable, the headroom for price appreciation in this category has reduced.
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