“The pent-up demand which was witnessed earlier seems to be subsiding once again, given the slack period prior to the festive season,” said a note by Prabhudas Lilladher, a Mumbai-based securities firm.
Lease registrations are a good indicator of underlying economic and commercial activity. As prices of property stay firm, lease registrations go up. In July 2012, lease registrations fell 17 per cent over June 2012. “Lease registrations, which have been clocking new highs for the last several months, have been severely impacted with a slowdown in commercial real estate,” the note adds.
A Reuters poll of property experts last month said that demand was falling and high prices in Mumbai were not backed by fundamentals. The Mumbai market has 37-40 months of inventory lying in the market. Experts said that no efficient market could maintain more than eight months of inventory.
Also read: Why property prices in Mumbai are likely to fall
According to an analysis of Mumbai property prices by Citibank in June 2012, the city's property market was a puzzle for experts. Residential property prices in Mumbai held firm despite high interest rates, rising inventory of homes with developers and unaffordability.
Read more: Mumbai property: Five reasons why prices never fall
Besides rising land prices, the project deal structure does not allow cutting of prices. Property developers involve equity investors in project from the start. They promise a specific return on investment to that investor. This makes cutting on home prices tough, Citibank had said.