Rentals go up as sales go down in city

With property prices on a high, Mumbaikars prefer not to buy homes

MUMBAI: The rush to buy apartments is slowing down — Mumbaikars are preferring to wait for prices to fall and meanwhile they are renting. What has been anecdotal among brokers and agents is now confirmed from official figures. In the first four months of the year, rental registerations have been moving up while purchases are the same as last year.

Statistics from the office of the Registrar of Housing Societies, show there has been a 30 per cent increase in the number of Mumbaikars opting for rented accommodation as compared to what it was around the same time last year. The statistics show that in the first quarter in 2007 there were over 25,639 homes purchased, while this year in the same period there were just 21,282 homes purchased.

Take the example of Rupa Agrawal who sold her 3 BHK in Feb ’08, but hasn’t been able to purchase a new house till date. Citing high prices and limited choices as the reason, the 32-year-old jewellery designer says, “Many people are saying that there would be a fall in property prices later in the year and I am hoping to find myself a property then.” Till then, Rupa is quite happy staying in a rented apartment. “I don’t have kids so I can move homes whenever I want, too. It helps me move around the city without being constrained to one place.”

VA Satdive, Registrar, suburbs, says, “Every year there is a steady rise in both rented and purchased property, as there are more people coming to the city every year. But this year, it has been an unusual jump in rented property. On the other hand the fall in the number of homes being purchased indicate a slow-down in property. Every year the number of people purchasing property increases. This year, unlike the last seven years, there’s been a slow-down.”  

With the demand for rentals increasing, real estate consultants blame the steep property prices for the fall in demand for owned property.

Pranay Vakil, Chairman of Knight Frank says, “There is a slow down in property in the city this season. The volumes have fallen by 40 per cent. There could be reasons like the high interest rates, the crash in the stock market and fact that the property prices have increased making homes unaffordable to most. That’s the reason people opting to rent instead.”
 
Piyali Dasgupta, Sr. Manager, Cushman & Wakefield adds, “This year has been a pathetic mismatch. There are few choices for the buyer and after a particular price range there is hardly any choice. So even if the buyer has the money to spend, there is nothing much on offer. The current property prices have caused investors and some prospective buyers to shy away from the market, as people hoping the prices will dip and they can then invest.”

Consultants add that even with a slow down, builders are refusing to drop prices. According to Vakil, “The high prices have caused a property slow-down, but builders refusing to drop rates; they would rather give added benefits like free parking, with few builders ready to pay the stamp duty too.”

With property prices still high, consultants add that it would be long before the number of people buying property increases. Sunil Bajaj, real estate consultant says, “With the current property prices, buyers are finding it profitable to sell off their property in Mumbai and head to other cities like Pune. Also migrants are so put-off with the high prices that it would take a serious correction in the market for them to invest in property.”