Home sales in Mumbai, India’s most expensive property market, fell in the quarter ended September as record prices crimped affordability, according to Liases Foras Real Estate Rating & Research Pvt.
Sales slid 1.2 percent to 9.75 million square feet in the three months ended Sept. 30 from the previous quarter, said Pankaj Kapoor, founder of Liases Foras, a Mumbai-based real estate research company. Prices in Mumbai rose 1.9 percent to a record 11,385 rupees ($211) per square foot, he said.
“The Mumbai market has become inefficient, high prices are hurting affordability,” Kapoor said in a telephone interview from Mumbai yesterday. “Supply has increased but sales haven’t kept pace.”
Mumbai’s efficiency index, which measures the impact on demand given the increase in property prices, fell 6 percent to 11.66 in the quarter from the previous three months, Kapoor said. The index is near a record low and compares with the high of 85 in June 2009, he said.
India’s central bank left interest rates unchanged at 8 percent to fight price pressures while cutting lenders’ reserve requirements to back a policy revamp by the government aimed at reviving growth. Governor Duvvuri Subbarao reduced the cash reserve ratio to 4.25 percent from 4.5 percent, adding about 175 billion rupees to the banking system, the Reserve Bank of India said in Mumbai today.
Sales in Hyderabad gained the most, increasing 46 percent to 4.06 million square feet in the quarter after dropping to their lowest levels in more than three years, data compiled by Liases Foras showed. Prices in the city climbed 3 percent from the previous quarter. Sales in the western Indian city of Pune gained 27 percent to 11.31 million square feet.
Sales in the National Capital Region, which includes New Delhi and its surrounding areas, rose 22 percent to 25.94 million square feet in the quarter, Liases Foras’s data showed. The weighted average selling price rose to 4,123 rupees a square foot, 11 percent higher than the previous quarter.