Report expects easing of home prices in Mumbai

In a research report on real estate sector, Kotak Institutional Equities said it expects property prices in key markets like Mumbai and national capital region
to ease because of unaffordable prices, lower demand and liquidity issues.

Prices in Mumbai, Gurgaon rose earlier because of delay in the launch of new projects, the report said. Laun new projects, the report said. Launch of new projects in Mumbai was affected by an 18-month approval hiatus and this restricted supply, the report said.

Prices increased in Gurgaon as there was no new construction for a year. The blended average ticket size of units exceeds that of Bangalore and Pune, which are much larger commercial, industrial and residential markets, the report said.

But the report expect prices to correct with more supply scheduled and a slow financial sector (and consequently slow commercial absorption).

The report noted that fewer home loans have being given out over the last few months, pointing to a drop in demand.

Further, real estate firms are struggling to get loan from banks and the latter have reduced their exposure to such companies by Rs 4,800 crore in the first half of the financial year ending in March 2013, the report said.