Real Estate especially in Mumbai has done exceptionally well in the last three months. This has bothered a many in the industry, who think home prices may go up. Here we answer the question.
By Varun Singh
Mumbai’s real estate market has performed very well especially in the last three months. To be specific since the stamp duty cut that was announced by the state government.
To give perspective to the above statement one can see that in 17 days of November 2020, Mumbai had taken over entire November 2019’s sales.
What had added to the high sales apart from the stamp duty cut was the discounts that developers were offering home buyers,
The fear that crops up in ones mind is that will developer hike the home prices because the market is doing good?
If this gives any relief to home buyers and the market, it is most unlikely that developers will hike the prices.
One of the examples to substantiate this claim is the recent announcement by Ashok Mohanani, President, NAREDCO Maharashtra. NAREDCO had announced that in 1,000 projects of their members, zero stamp duty will be available till December 31.
In present system, circumstances and liquidity crunch do not allow any developer to increase prices. As such it is likely remain stagnant.Anand Gupta , Chairperson , Housing and Rera committee Of Builders Association Of India.
We posed the same question to Deepak Goradia, President, CREDAI MCHI whether prices will go up.
According to Goradia, in the current scenario too, developers are facing a lot of hardship. Projects are still unviable for many, but they are continuing without passing the burden on to the home buyers.
Many developers are still continuing with their festive offers and according to most of them not much from their side would change till the end of this financial year.
Hiral Sheth, Director-Marketing, Sheth Creators, when asked the question whether prices may go up? She said, “While it’s difficult to comment on market prices as they depend on many criteria, developers are being support of home buyers by offering various payment schemes and other discounts. Thus encouraging more fence sitters to take the plunge.”
The general economy is still reeling under the pressure of job losses and salary cuts.
However, what has boosted the real estate sales is also home loans at the lowest interest rate in the recent past. “One thing we can surely say that the markets have picked due to several reasons such as better home loan rates, stamp duty reduction , changes in the income tax margin on circle rates,” says Developer Tejas Vyas.
On the question of price, Vyas says, “Price improvement is directly proportional to the momentum of sales. In the last 3 months we have seen unprecedented momentum. We will have to see how far this momentum picks up before judging the price rise.”
The general feeling amongst most developers shows that price rise may not happen anytime soon, in spite of the market seeing good sales. Instead the discounts and waivers will continue for some more time, till the economy is back on track.
Another reason why most developers won’t take the risk of hiking prices is because the sales is based on several aspects and their offering discounts is one of the biggest apart from the slashing of stamp duty and lower interest rates.