The report "Housing 'un'affordability in Mumbai" by rating agency Crisil said the city has seen nearly four-fold jump in residential real estate prices in certain areas over the last four years, while growth in income of an average household has been in the range of 15-25 per cent annually. "The residential real estate price increases in Mumbai have been of the order of 50 per cent and 300 per cent over the last three years, varying area-wise. Housing finance rates have increased by more than 300 basis points over the same period. Even after adjusting for the increase in urban salaries, affordability has lowered by half over the last three years," the report said.
It added that most of the supply is targeted towards higher-income household, rendering it largely unaffordable for 56 per cent people living in the city with an annual household income below Rs 2 lakh. "Though most households in this category aspire to buy a house, residential real estate for this category is largely unavailable. Only three per cent of total households have annual incomes above Rs 20 lakh, which is the target segment for premium properties," Crisil said.
The report said residential property priced between Rs 40-80 lakh is witnessing a dip in demand and believes that if the existing supply is not absorbed by March, prices would see a correction of 5-15 per cent in select areas as the additional supply gets announced.