Mumbai residential home sales down to three-year low

Mumbai's residential home sales were down to a three-year low in the quarter-ended December with record home prices and higher interest rates hitting demand, according to Liases Foras Real Estate Rating & Research Pvt Ltd.

Sales for Mumbai property, the most expensive in the country fell 17 per cent against the previous quarter of 7.59 million square feet, according to Pankaj Kapoor, founder of Liases Foras. The city's unsold inventory, or the number of months needed to clear stock at the existing absorption rate, rose to 44 months, as against eight months that a ''healthy market'' maintained according to Kapoor.

The likely scenario that would pan out would see a dip in prices amid the dismal sales and with liquidity continuing to be tight Kapoor told Bloomber in a phone interview from Mumbai yesterday.

India's central bank increased borrowing costs by a record 375 basis points 13 times from mid-March 2010, in a bid to rein in inflation, hurting demand and investment. The Reserve Bank of India cut growth forecast three days ago, to 7 per cent in the year through March, from the 7.6 per cent predicted in October, following the slowest pace of expansion of the economy in nine quarters, as per the most recent government data.

The city's unsold inventory shot to a record 119.85 million square feet, while the weighted average selling price in Mumbai climbed to a record Rs10,558 a square foot, according to data showed.

Om Ahuja, chief executive officer of residential services at the Indian unit of Jones Lang LaSalle Inc said though developers were saddled with sizeable inventories of both ready and under-construction stock, they continued to be hesitant about announcing revised rates. He added, housing demand in the city had seen signs of weakness for the last few quarters and this may continue.