NEW DELHI: According to the latest reports, real estate prices around Delhi and Mumbai are not likely to witness a downtrend anytime soon. With higher rates of service tax and excise duties being announced in the Union Budget 2012, it is being slated that your dream home may now cost more.
A latest report from CRISIL Research states that new home prices in Mumbai are unlikely to decline in 2012. CRISIL states that notwithstanding a 40 per cent dip in sales of new homes since mid-2011, a sharp rise in construction and funding costs, in addition to amendments to the Development Control Regulations (DCR), will increase costs for builders and prevent a reduction in home prices.
CRISIL Research expects a 7-9 per cent increase in costs of key inputs in 2012, following a 25 per cent increase in these costs the year before. Recent amendments in the DCR will increase costs for builders further by 15 per cent, on an average.
DCR norms govern land development in Mumbai. The modified rules, which came into effect from January 2012, have revised the method of calculating the floor space index (FSI). Unlike the earlier practice, spaces allotted for balconies, flowerbeds, terraces and niches are now included in the FSI calculation. These spaces typically comprise one-third of the built-up area – even more for high-end apartments. This revision will impact the total area available for sale and, in turn, the revenues of builders.
While new home prices will remain steady, across Mumbai, the southern and central parts of the city will stand out as exceptions. Prices are likely to decline by 6-7 per cent in South Mumbai (Nepean Sea Road, Tardeo, Opera House, Peddar Road), and 8-10 per cent in Central Mumbai (Worli, Prabhadevi, Lower Parel).
Similarly it has been reported that new houses and plots offered by the UP Housing and Development Board (UPHDB) in Ghaziabad and Loni may cost nearly 20% more with the state government agency planning to jack up prices in the new financial year.
An internal committee of the board has recommended a raise of 5%-25% in the land cost in various schemes across Uttar Pradesh. This will lead to an increase of 10%-16% in case of a majority of housing board properties. But for areas around Delhi, the rise could be more, sources said.