Mumbai: Piling up inventory and rising demand from home buyers may result in declines in property prices by nearly 20 per cent in the Mumbai metropolitan region (MMR) over the next few months, according to a study.
The study conducted by ASK says the demand for housing in the MMR is expected to increase to nearly 1.20-1.25 lakh units annually over the next three years, while the property prices are likely to correct to up to 20 per cent in the next few months, mainly because of the large inventory.
The demand for housing has been driven largely by sectors like finance, media, telecom, entertainment, IT/ITeS, gems and jewellery and trading industry and will continue to do so in the future as well.
"The imminent economic growth would result in rising incomes, higher addition of jobs, and need for housing. The expectations of softening interest rates, standardisation in approvals and various policy initiatives will provide boost to the real estate sector," ASK Group CEO and Managing Director Sunil Rohokale told reporters here today.
At the same time, providing housing that meets the end-user budget would be the real challenge, he added.
ASK Property Investment Advisors CEO and Managing director Amit Bhagat said that increasing suburbanisation of the Mumbai region and demographic growth indicates a housing need of 1.20-1.25 lakh units annually over next 3 years.
"We expect prices to not go up due to balanced demand-supply, while growth corridors are expected to witness rise in demand from end-user," he said.
"We expect nearly 20 per cent correction in prices in the next few months," he added.
In the last five years, property prices had increased by nearly 20-30 per cent, he said. In FY14, nearly 1.29 lakh units were launched, while the inventory was around 2,46,700 units.
Bhagat said locations like Chembur, Ghatkopar, Navi Mumbai and Andheri will be the future growth centres, mainly because of the infrastructure projects coming up in these markets.
"Scarce land availability with limited floor space index (FSI) in the island city has compelled commercial and residential development to move north-wards. Besides, various infrastructure projects coming up in the suburban regions has attracted developers to develop more projects in these markets," he added.