Despite the tall promises of affordable housing by various authorities, approximately 69% of Mumbai’s unsold houses are priced at an unaffordable Rs 1 crore, according to a report by a real estate consultancy firm.
The report, compiled by Jones Lang Lasalle (JLL) India, states Mumbai has 44,302 unsold houses, of which 30,501 are priced at more than Rs 1 crore. “A majority of home buyers can’t pay so much. The government needs to intervene and create infrastructure on the outskirts of the city to give a boost to affordable housing,” said Ramesh Nair, COO and international director, JLL India.
While not many builders are offering houses priced at less than Rs 30 lakh, a measly 3.21% are currently available in the price range of Rs 31 lakh to Rs 62 lakh.
In the first three months of 2015, 90% of the new projects – both ready and under-construction — were priced at Rs 1 crore and above. In the next three months, the percentage dropped to 83%, partly because of launches in suburban areas, where the prices are relatively less.
Builders point to the high input costs. “The cost of land has increased substantially. Government premiums and taxes only add to the price, making houses costlier,” said Bhavesh Sanghrajka, managing director, Shraddha Lifescapes. “There is very little support from banks and financial institutions. We have to depend on private lenders, whose interest rates are very high.”
In the past few years, the real estate sector has been going through a rough phase with sales dipping to unprecedented levels. Faced with exorbitant prices, most home buyers have postponed their purchase plans. The stringent lending norms and hike in interest rates for home loans have made matters worse, claim experts.