Property sales registrations in Mumbai skid 5.9% in July 2012 against last year as buyers continue to resist purchasing houses in a sluggish real estate market.
On a month-on-month basis too, July numbers remained 2.4% lower than June, after showing some improvement in March to May, 2012, reveals data from the director general of registrations, Mumbai. High interest rates and dearth of options in the affordable housing segment is keeping buyers away.
After arresting the steep fall in registration numbers in the first six months of 2012, which were lower by 3.4% over the same period last year, hopes of revival in Mumbai?s residential realty market were renewed. However, the numbers are again on a decline. The festival season, considered auspicious to buy property, is just a month away and this could be the slackness prior to that, as people postpone their purchase decisions in the hope of getting better deals and discounts.
Last year too, the real estate developers were pegging their hopes on the festival season after seeing tepid sales in the major part of 2011. However, according to registrations data, in 2011 the sales registration numbers were down 22% over 2010.
?The pent-up demand which was witnessed earlier seems to be subsiding once again, given the slack period prior to the festive season,? observes a Prabhudas Lilladher report.
Fitch Ratings in an August 2012 report maintained the outlook on Indian real estate sector as negative for the second half of 2012-2013 due to persistent sluggish demand, high construction costs and liquidity pressures.
?Real estate companies will continue to face margin compression from high construction costs for both building materials and labour,? it said. Reliance of real estate companies on operating cash flow will assume significance in the near term as available funding options remain limited. ?Growth of bank lending to the commercial real estate sector was low at 1.5% year-on-year in June 2012,? the rating firm said.
The first quarter sales for the financial year 2012-2013 also dissappointed. Mumbai-based Godrej Properties? quarter-on-quarter sales declined 2.6% to 7.5 lakh square feet in the June 2012 ended quarter. Another Mumbai-based developer Oberoi Realty Ltd saw a sequential drop of around 25% in the sales volume to 1.2 lakh square feet against March 2012.
However, real estate developers say that registration numbers have a bit of lag and the month of July has actually seen an improvement over June. ?There is a reasonable traction in the residential market, especially in the high end segment,? says R. Karthik, senior vice president (marketing), Lodha Group. ?We have been busy with some launches and pre-launches and enquiries are fairly good, which shows that people are getting back to a buying mode,? he added.