Seemingly contradictory news clippings of real estate prices in Mumbai going (a) Up and (b) Down on the same day. How did this happen? As usual, statistics and how much, and where you read the article in question play defining roles:
1. First up, this infographic in the printed format of Economic Times dated 14th May, 2012 tells you that real estate prices in Mumbai are up17% for the March quarter FY12 as compared to the same for FY11. They also compare prices to June 2008 and June 2009, which to me makes absolutely no sense, but I guess its their paper. Then it says that this is "despite increasing inventory levels" when RIGHT BELOW THE WORDS THERE IS A GRAPH SHOWING DECREASE IN INVENTORY. Basically inventory in Q4 was same as Q1, having briefly first decreased, then increased and then decreased again. Sales are up on flattish prices, with a q-o-q increase of 3% (prices) and 20% (sales).
Here's the infographic:
2) If, on the same day (same night actually), you had gone to their website and read this link, you could have been forgiven for thinking that prices in Mumbai had actually gone DOWN.
Mumbai's residential property market has shown a negative growth of -9.1% during the year ended March 2012, according to the latest Knight Frank Prime Global Cities Index that compares the performance of prime sales markets across key global cities.
Most of the prospective home buyers in Mumbai are on waiting for an anticipated price correction in the backdrop of oversupply scenario in some of the areas of the city and rising inventory level of nearly 120 million sq ft being under construction.This got a fair deal of publicity, where a lot of people were talking about the much-awaited real-estate correction finally happening. Or starting, at least. But everyone in my firm were also wondering where in the hell had prices actually fallen? Everyone attested to the fact that prices in their respective areas (most of us live in the suburbs) had not budged, if anything, they had increased. So where?
Also, this kinda left me confused, have prices gone down or up? The catch, dear readers, lies in the details. Read the above paragraph again. The article is performace of prime sales markets. What does that mean? If, like me, you read this for the first time, you'd think that Mumbai on the whole is taken as a 'prime' location and therefore they're talking about the city as a whole. Right? Not quite.
3) Then, I read this, on moneycontrol, where for the first time, I saw what the definition of prime sales market meant. Prime property corresponds to the top 5% of the mainstream housing market in each city.
And that, to me, was an A-ha! moment. So prices fell by 9% in the Southernmost of South Mumbai and despite the overwhelming influence those prices would have on the median, the overall prices across the rest of Mumbai increased by some amount!
Basically, all your real estate prices in suburbs, Thane etc. etc. remained either constant or increased. And some people in South Mumbai sold their apartments for fewer crores. Move along people, still no way to buy a flat in Mumbai...
Here's the kicker. If you go to the Knight Frank website, on the home page, the very first article (as of today) is : Average cost of flat in Mumbai is Rs. 2.60 crore.