Sep 05, 2013, 07.51 PM IST
"Declining affordability and high economic uncertainty are the twin reasons, which would cause property prices in Mumbai to remain subdued, in the near and medium term," said ICRA in a research report.
"Declining affordability and high economic uncertainty are the twin reasons, which would cause property prices in Mumbai to remain subdued, in the near and medium term," it said in a research report.
The capital rates in the city's real estate market have remained largely firm in the past, supported by limited supply as well as increasing cost pressures, Icra noted. However, peripheral areas of Thane, Navi Mumbai, would continue to report healthy development as well as traction in the affordable housing segment, given the lower ticket sizes," it said.
Although RBI in June 2013 lowered the risk weightage on loans extended to developers for residential projects to 75 per cent from 100 per cent, which could have provided some breather on interest rate front, the increase in base rate and recent tightening in the liquidity, has nullified the impact to a large extent, Icra said.
"Moreover, most of the banks have increased their base rates in the recent past, which in-turn would lead to an increase in acquisition cost for the buyers thereby resulting in slower off-take," it said.
Icra has also noted that although Development Control Regulations (DCR) have been revised, and project approvals have started flowing in the system, the approval process itself is yet to gather momentum characteristic of earlier years.
Earlier, real estate market in Mumbai had come to a near standstill in terms of new launches owing to abrupt ceasing of approval process by regulatory authority, the BMC, it said.
Video of the day
Dec 11 2013, 09:54
- in Business
Dec 4 2013, 11:08
- in FII View
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.