​Here’s what may take the bloom off the new homes in Mumbai and Delhi

Every man has a dream to buy his own house, but the sky-rocketing prices of these new launches have made it impossible for Mumbaikars and Delhiites to transform this dream into a reality. The real estate markets in these two metropolitan cities have been adversely affected by a huge inventory. This was revealed in an Economic Times report.

Anuj Puri, chairman and country head, JLL India, told the ET, “The real estate market is currently sluggish, and there's very clearly an overhang of inventory."

Due staggering situation that this sector is facing, the reality developers aren't even trying to increase prices. Samantak Das, chief economist and director, research, Knight Frank India, told ET, "With absorption rate at new low, builders are trying to get their volume back."

Price stagnation is perhaps the first sign of a bear market in real estate. According to Investopedia, a market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining.

The financial daily stated that once investors realise this and begin to offload their stock, the 'price correction' starts. This was clearly visible in Delhi when investors tried to exit by offering discount to the market price. "Price correction in the Delhi NCR in the past two years was 15-20%," Anil Kothuri, president and head, Edelweiss Housing Finance & Credit, told the ET.

The same scenario is evident in Mumbai as well. Feroze Azeez, executive director and head, investment products, Anand Rathi Private Wealth Management, told ET, "The current supply is significantly higher than demand. The only place where there is some demand left is in pre-leased commercial properties.”

In between 1995 and 2001, the Mumbai real estate market had seen a very big correction owing to a reduction in prices by half in many pockets.
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