Mumbai property market, like its counterparts, has been hit hard by demonetization. Sales have dried up and customer inquiries have dropped. According to the latest report by Knight Frank India, residential sales in the Mumbai Metropolitan Region have recorded its worst in the last seven years. This dismal performance was recorded for the last quarter of 2016, i.e. October-November and has been attributed to government's move to demonetize 96% of total currency floating in the economy.
In an attempt to pacify the sentiments, PM Modi announced a slew of schemes in his address to the nation on the last day of 2016. On his list were two housing schemes under the Prime Minister Awas Yojana (PMAY). For the urban poor, home loans up to Rs 9 lakh will get 4% interest exemption, and loans up to Rs 12 lakh will get 3%. In villages, home loans up to Rs 2 lakh will get 3% interest exemption. This would apply not only to loans for building new houses but also those taken for renovating or expanding an existing one.
This announcement was followed by many leading banks bringing down their lending rates. This has infused some confidence among developers who are expecting the demand for affordable homes to go up.
Certainly, the impact of the announcement will be such that the demand should go up. This is because the cost of home ownership is ultimately going to go down. The interest subsidy that the PM announced has been received well in the past as well for all the PMAY customers. I would certainly like to believe that going forward the things should improve”, says Sriram Mahadven, Business Head-Happinest, Mahindra Lifespaces.
But brokers believe that there is still some time before the home buyers come back to the market as they feel that these sops are too little, too late.
The situation is that buyers in the primary market are waiting for the developers to drop down the prices. The State Bank of India (SBI) started with 0.9 percent, the other banks are still cutting rates at 0.8-0.7% which I think is quite low to boost sales in the Mumbai market”, says Ramprasad Padhi, President, The Association of Real Estate Agents
As far as Mumbai property market and its unique dynamics are concerned, these schemes won’t be able to do much to revive the buyer sentiments. But experts believe that 2017 would be a year of good deals coming straight from the developers.
I would not think that there would be a lot of price increase. In fact on the peripheral you will see there will be definitely better deals available but again for buyers who are making their purchase decision this year, I would recommend that they should go for right development partner, do not simply go for a price cut, make sure that as an end user you go for offers which offer you right quality, right amenities and there is enough financial muscle with the developer to deliver the quality product on time. Within the rest of the city, I would just say that with the interest rates coming down you could plan better next year, wait for the financial budget in February”, Rohan Sharma, Associate Director – Research & Real Estate Intelligence Service, JLL India
If property experts are to be believed, although the market is presently subdued, but with RERA just a few steps away from coming into force and expectations of a few more incentives for the sector in the upcoming Union Budget, buyers’ confidence is bound to get a boost.
Edited by Neetika Bajaj, Assistant Editor, NDTV