Realty axis

Mumbai: Mumbai may be second to Delhi in unsold homes, but it will take longer to sell them. Real estate developers in the financial capital must wait over three years to clear 1.13 lakh units or 120 million sq ft as high prices deter potential buyers, shows a study released by Liases Foras, a real estate rating and research consultant.

The study covers units in Mumbai Metropolitan Region (MMR) — including Mumbai city, Thane, Kalyan and Navi Mumbai — National Capital Region in Delhi, Pune, Hyderabad, Bangalore and Chennai.

NCR, with 232.57 million square feet or 1.60 lakh units of unsold homes — roughly double Mumbai’s —will likely sell homes much faster, in 23 months.

“The NCR market is primarily an investor market and has very little comparison with Mumbai,” says Om Ahuja, chief executive officer (residential services) at Jones Lang LaSalle India. “The real estate…

Source- http://www.financialexpress.com/news/delhi-sells-its-homes-faster-than-mumbai/944702/

There are so many residential flats lying unsold in Mumbai that it will take more than three years to clear the stock. This means the skyrocketing price of your dream house might ease up.
The value of the current unsold housing stock in Mumbai is around Rs8,535crore.

According to the quarterly report released by real estate research firm Liases Foras, there is 12.9 crore sqft inventory (housing projects launched, but not necessarily built) with 1.13 lakh housing units lying unsold in the Mumbai Metropolitan Region (MMR), which includes the city and its satellite towns. Around 6 crore sqft inventory with 35,000 housing units is lying unsold within the city limits, the report added.

The size of each flat in the MMR is 1,100 sqft, while that in the city limits is 1,600 sqft.

“It will take at least 40 months to sell this unsold stock in Mumbai, and that too if there are no new projects. But launches are happening frequently. This means the inventory will pile up further,” said Pankaj Kapoor, managing director of Liases Foras.
“In a healthy market, the inventory should be cleared within eight months. But the number of unsold flats in the city is rising every year. The housing stock is not drying up as it was projected in one-and-a-half year back,” he added.

In 2010-11, 2.66 crore sqft residential stock was lying unsold within the city limits, and 8.17 crore sqft in the MMR. Still, developers launched more than 100 housing projects in the city last year.

But the realty scene is not so grim in other cities.

Last year, while only 96 lakh sqft residential space was sold in city —at 3% — Pune registered 28% sales and Chennai 37% sales.
“Pune is selling more residential flats compared with Mumbai. It’s real estate is an end-user driven market, which is a healthy and good sign,” said Kapoor, adding that the realty market in Mumbai is unproductive.

“It is not beneficial to anyone except investors. Developers will face severe fund crunch; banks will be reluctant to offer loans and people will not afford to buy their dream house,” he added.
Anand Gupta, treasurer of the Builder Association of India, said there is huge gap between the demand and supply.

“There are many people who cannot afford to buy their dream home. And, then there are investors who buy more than one flat because they get good appreciation. Because of faulty law, they do not give the flats on rent and hence, the unsold inventory percentage is so high,” he said.

Source- DNAIndia

MUMBAI: Real estate prices in metros such as Mumbai may be at a record high. But, on an average, homes across the country are more affordable than they were five or even ten years ago.

According to an analysis of HDFC data, the average cost of a house purchased by its borrowers was Rs 12 lakh in the year 2002. Over the years, the average amount paid for a house (by HDFC borrowers) rose to Rs 40 lakh in 2011.

But salaries have risen faster. The same period saw the average borrower’s salary rise from Rs 2.45 lakh to Rs 8.3 lakh. As a result, affordability – measured by the home price as a multiple of annual salary – has improved .

The borrower, who on an average needed 5.1 times his annual salary to buy a house in 2002, needed only 4.8 times his annual salary in 2011.

The affordability figure is a national average and over the years HDFC’s borrower profile has also changed with more loans being disbursed in smaller cities. However, the long-term trend in affordability holds true for most cities because of high levels of income growth in the first decade of the 21century. The country’s per capita income has tripled from Rs 19,040 in 2002-03 to Rs 53,331 in 2010-11 .

The increase in affordability would mean that housing and housing loans will continue to grow in coming years. Considering that there is a housing shortage of 26 million housing units according to Jones Lang Lasalle, the potential will last for some time.
If affordability has improved for home purchase, it is has jumped for rentals. “Around 2001-02, a one-bedroom apartment in Andheri costing Rs 22 lakh would fetch a rent of Rs 8,000 to Rs 9,000. Today, the market value of the same apartment is over Rs 1 crore, but the rental income is at best Rs 25,000. Rentals have not kept pace with house prices,” says Deepak Mehta, a Mumbai-based real estate broker who specializes in the suburb of Andheri.

Incidentally, the golden period for buying property was the year 2004 when, on an average, the HDFC borrower paid the equivalent of 4.3 years of his prevailing salary for buying a house. It was at this time that borrowers got full benefit of tax breaks because of larger loans and interest rates started dropping.

Internationally, rentals up to 25% of income are considered affordable. However, this would vary depending on how much of the income is left over after providing for basic necessities.

“Monthly rentals in Mumbai are in the range of 22 to 25 basis points of the property value,” says Mehta. According to real estate developers, one of the reasons for high prices in Mumbai is the freeze on supply. According to Vyomesh Shah, MD, Hubtown, high prices in Mumbai are largely because of the constraints on supply.

“Today, even in a city like Ahmedabad, there are projects where you can get apartments where the rate per square foot is around Rs 2,500″ says Shah.

Source- http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Homes-become-more-affordable-in-last-10-years/articleshow/12959211.cms