Demand for Housing Continues to Grow in Mumbai
Mumbai is currently considered the most expensive cities in India and in the world when it comes to residential real estate. One may hardly find affordable houses within suburban Mumbai. The prices in surrounding regions of Navi Mumbai and Thane too have started going beyond the affordable range. However, while the number of sales have gone down and experts are looking at a possible stabilisation in property prices, according to CommonFloor data, the city continues to witness a growing demand for housing, both for rentals as well as purchasing.
Mumbai real estate scenario
The country’s financial capital has been continuously witnessing growing increased property prices over the past few years. It was only during the last few quarters, the price rise has taken a hit due to poor absorption rates in the city owing to various factors. One may find it extremely hard to find an affordable house in suburban Mumbai. While the property prices in South Mumbai are at least about Rs 35,000 per sq. ft., the property prices in a western suburb may go up to Rs 45,000 per sq. ft. With a boost in infrastructure, the eastern suburbs such as Chembur and Vikhroli too are seeing property prices in the range of Rs 15,000-17,000 per sq. ft. Some of the areas in Navi Mumbai and Thane close to suburban Mumbai too are witnessing fast increase in property prices. Only few peripheral areas are currently in the affordable range.
This was one of the factors that led to a lower sales in Mumbai over the last few quarters. With a fall in absorption rates, experts are now expecting a price stabilisation in the city, if not a price correction.
Demand continues to grow
Despite the high property values and low sales in the city, it has been observed that demand for housing has been on the rise over the past few quarters. Data obtained by CommonFloor indicates an increasing number of queries for both rental housing as well as buying since Q4 of 2013. The following graph shows the demand trend in the city.
Figure 1: Percentage growth in queries in MMR (Source: Real insights by CommonFloor.com)
One may see from figure 1 that the number of seekers for buying and renting properties in MMR have continuously grown since the final quarter of 2013. While it may be seen that the number of queries for buying has slightly slowed down, the number of queries for rentals is still strong. The number of seekers grew by about 50 per cent within the period of Q4, 2013 and Q3, 2014, the number of queries for rentals during the same period was up by almost 250 per cent.
There are two inferences that may be drawn from the above trend. One is that, though the property prices in suburban Mumbai are higher, there are few more regions in MMR such as certain nodes in Navi Mumbai, Vasai–Virar and Kalyan–Dombivli that are available at a lower price range. As a result, these areas are currently witnessing a good demand. Hence there is a continuous growth in demand for house purchases. The second inference is that, due to the higher property prices in Mumbai, the queries for purchases have slightly slowed down, while the number of seekers for rentals have remained almost constant.
