“Prices of luxury apartments across the country – in cities such as Delhi, Mumbai and Bangalore – are not rising as fast as they used to two years ago, forcing wealthy investors that made a bulk of the buyers to retreat, turning it into a buyer’s market for the first time in two years” Reports today’s Economic Times. It further states, “The yearly price appreciation in the high-end property segment has come down by 35-50 per cent since 2008-09 when investors used to book returns of 15-20 per cent on an average (some properties saw returns as high as 30 per cent a year). In the last two years, price rise in this segment has plateaued, with yearly returns of only 6-7 per cent across the country.”
The definition of luxury homes varies from city to city. In Gurgaon, for instance, luxury homes would cost anything above Rs 2 crore whereas in Mumbai it would cost Rs 4-5 crore and beyond.
Of a total of 63,662 high-end apartments that are under construction today in Delhi and NCR, Mumbai and Bangalore, about 19,332 are currently unsold, according to the data provided by property research and analytics firm PropEquity. A chunk of the unsold apartments are in projects that were launched in the last 12 months.
The maximum number of under-construction unsold apartments in this segment are in the Mumbai Metropolitan Region (MMR) with 11,086 unsold units out of 28,905 apartments, followed by Bangalore (4,280 unsold unit out of 10,242). The national capital region (NCR) has 3,966 unsold apartments out of a total of 24,515 under-construction apartments.
Read the Economic times report HERE
Then how is this bad news for middle income buyers?
First Post reports “ Prices of mid-segment properties have risen as investors are beginning to shun ‘overpriced’ luxury houses due to poor returns and are now seeking to invest in lower-priced properties. Real estate agents are now pitching mid-income homes which are priced at Rs 40-70 lakh to the rich who were earlier investing in luxury homes.’
It further adds, ” Most of the pent up demand is in the lower income housing bracket, with the luxury market being heavily over-supplied. And it is this demand-supply mismatch which has now lured investors towards mid-level homes too.
Read the First Post report HERE
Compiled by Vishnu.S.Jarugumilli