Mumbai’s residential home sales climbed to an 18-month high in the fiscal first quarter as new projects in the suburbs boosted demand, according to Liases Foras Real Estate Rating & Research Pvt.
Sales in Mumbai, India’s most expensive property market, rose 7 percent to 9.79 million square feet in the three months ended June 30 from the previous quarter, the highest since December 2010, said Pankaj Kapoor, founder of Liases Foras, a Mumbai-based real estate research company. The value of homes sold in the city fell 17 percent to 71.06 billion rupees ($1.26 billion), Kapoor said.
“Although sales in Mumbai have improved in terms of number of units, the value of stock sold has declined, suggesting that cheaper properties available in the extended suburbs of the city were major contributors of this improvement,” Kapoor said in a phone interview from Mumbai yesterday.
Housing Development Finance Corp., India’s biggest mortgage lender, predicts an increase in home loans of as much as 20 percent as a further half a percentage point interest-rate cut will spur demand in smaller cities. The forecast shows the central bank has leverage to stimulate housing demand in an economy growing at the slowest pace in almost a decade.
Credit Suisse Group AG and Yes Bank Ltd. also forecast the Reserve Bank of India, which in April cut the repurchase rate to 8 percent from 8.50 percent in its first reduction since 2009, will lower it to 7.50 percent by Dec. 31 to boost growth. The central bank left the rate unchanged in the mid-quarterly monetary policy review in June, and all 11 economists surveyed by Bloomberg expect no change at its next appraisal on July 31.
Sales in Bangalore gained the most, increasing 56 percent to 16.48 million square feet in the quarter, while prices climbed 5.5 percent
In Mumbai, the number of months needed to clear stock at the existing absorption rate was at 37 months, Kapoor said. A “healthy market” normally maintains about eight months of inventory, he said.
Unsold units in the city declined by 5.9 percent to 121.97 million square feet, according to Liases Foras, whose clients include Housing Development. The weighted average selling price rose to a record 11,154 rupe2es a square foot, the data showed.
Sales in the National Capital Region, which includes New Delhi and its surrounding areas, fell 31 percent to 21.33 million square feet in the quarter, Liases Foras’s data showed. The weighted average selling price rose to 3,729 rupees a square foot, 4.5 percent higher than the previous quarter.