68% flats in Mumbai cost over Rs1 crore

Affordable housing in Mumbai is more of a myth than reality if a recent study is to be believed. Only 2% of flats available in the city cost between Rs25-50 lakh, according to a study conducted by Liases and Foras, a real estate research firm. Most of these 1BHK houses are located in the far-flung areas of the city such as Marol and Saki Naka and are surrounded by filth and slums.

The firm said a whopping 36,000 flats have not been sold as 30% of flats in Mumbai cost between Rs50 lakh and Rs1 crore; 38% fall in the Rs1-2 crore bracket while the remaining 30% cost over Rs2 crore. These include 2BHK and 3BHK apartments in posh areas of the city.

The average price of a flat in greater Mumbai (city and the suburbs) is Rs2.34 crore, up from Rs2.14 crore last year. The figure for the Mumbai metropolitan region (Thane, Panvel, etc) is Rs1.4 crore compared to Rs87 lakh last year.

“The average cost of a flat was Rs27 lakh in 2001. It is almost Rs2.34 crore now. Flat prices have gone up ten times in the past decade. There were 55% slums because of unaffordable houses 10 years ago. The figure is now 70%. If the prices do not come down, more slums will mushroom in the city,” said Pankaj Kapoor, managing director, Liases and Foras.

He said houses which fall in the Rs25-50 lakh bracket find no takers as they are located at neglected areas like Saki Naka and Marol in Andheri (East). “Who will buy 500sqft houses by paying Rs50 lakh in these areas? People would rather stay in a rented place close to their office,” said Kapoor.
 
The skyrocketing realty prices have forced genuine buyers to rent a place as it is more affordable. Besides, it also saves the time they spend on their commute to office.

“If a person earns Rs20-25 lakh annually, he would want a house in greater Mumbai to suit his lifestyle and needs. But a house in that zone costs over Rs2 crore and is beyond his budget. The other option is to move to the distant suburbs such as Panvel and Kalyan. But he won’t buy a house there,” said Kapoor. “There is a mismatch of aspirations and affordability which has created an imbalance in the real estate sector. The present market does not have a target audience.”

Maharashtra Chamber of Housing Industry president Paras Gundecha admitted that realty prices are going beyond the common man’s reach because of high cost of labour, construction and land prices. He says instead of selling land at a reasonable rate, the authorities, including the National Textile Corporation and the state, are e-auctioning land.

“That fetches them a huge amount of profit but makes houses unaffordable for the common man. If a developer pays an obscene amount for the land, he is bound to recover it from the buyers. If the government is unable to provide land at an affordable rate, they should at least increase the floor space index,” said Gundecha.

Niranjan Hiranandani, managing director of the Hiranandani Group, said the supply of houses has not increased in proportion to the demand due to various reasons and so, the affordability factor is diminishing. “Earlier people bought houses when they were 40 or 50. Today people in the 20-30 age group are tempted to buy flats. They prefer to stay separately instead of living with their parents. Several flats may be vacant today, but they will be sold in the future because of the enormous demand,” said Hiranandani.