Property registrations in Mumbai rose 37% in March to 5,766 units compared to February on the back of increase in new project launches, says a report compiled by IDBI Capital Markets Services.
Total registrations grew 18% in the financial year 2012 ending March to 70,803 units compared to financial year 2011.
“We had seen a similar hike in registration numbers in December to 5,891 units, while the trailing three-month registration data remained stagnant at 4,802 units,” said the report.
The rise in registrations was also driven by investors’ inability to sell off properties they had invested in. “Investors buy under construction apartments but they typically need a no objection certificate (NOC) from the developer if they want to further sell it. However, with the markets slowing down, developers are reluctant to give NOCs to investors as they might sell their properties below the developers? quoted rates,” says IDBI Capital Markets Services analyst (institutional equities) Hansraj Singh.
“In the last quarter of a given financial year, we generally see people re-investing in property to save on capital gains tax, which is another reason why the registrations go up in the last quarter, ” says Om Ahuja, CEO (residential ssrvices), Jones Lang LaSalle India, a property consultant.
“In terms of pricing in Delhi and Mumbai, customers need to remain cautious. If the purchase is for self use it is fine. But this is not an investor market,” Ahuja added.
With developers reluctant to cut prices in the hope of a revival in volume in the festive season in the third quarter of FY13, residential volumes are expected to remain subdued in financial year 2013 as well. “Consequently, we maintain our negative view on the Mumbai residential market.”
Reserve Bank of India’s (RBI) quarterly house price index (HPI) for the third quarter of 2011-2012, indicated that housing prices have increased for all cities, barring Kolkata, on an annual basis. This was based on the property transactions from nine cities. The index indicated that the price increases moderated in Mumbai, Jaipur and Kanpur. “The number of transactions on an annual basis declined in Mumbai, Jaipur and Kanpur, while the y-o-y increase moderated in Ahmedabad and Jaipur,” said RBI.
“The chances of an advertised price correction are very remote,” says Knight Frank India national director (residential services) Anand Narayanan. “In the last two quarters, more than affordability, sentiment among buyers towards purchasing property is improving. The 50 bps cut in interest rates has also given a directional change to the mindset of customers towards buying property,” he added.