The real question is which segments of the market have seen a slowdown. Is it the 5k segment, the 10k segment or > 10 segment. My guess is that the big number of registrations are in the 2k-5k segment and there on the curve is trending down towards the right as the price per sq/ft drops. Indian Express reports

MUMBAI, JUNE 1: Mumbai’s realty market, which in recent years witnessed an astronomical price increase bringing it in the league of the world’s most expensive cites, is finally taking a beating. Property sales that have been growing at a clip of about 20% every year have plummeted by 17% in 2007-08, the first time in six years.

Though the property market in the country’s financial capital has been rife with talk of a slump for some time now, this is the first time figures prove the extent of the slowdown. Information about residential and commercial property sales from the stamp duty registration office show almost 12,000 fewer transactions during the last financial year compared to the year before. From April 2007 to March 2008, 62,595 flats were purchased in Mumbai as against 74,555 in 2006-07.

Analysts said this could be just the tip of the iceberg as stamp duty registration figures indicate the trend only among genuine homebuyers. There could be more of a downswing in real estate investments as people are backing off from the sector in large numbers.

Sanjay Dutt, joint managing director of Cushman and Wakefield, said that annually there has been a 20-25% increase in transactions since 2001. “The market peaked in 2007. There were glimpses of market correction in certain cities by the end of 2007. But it was only in 2008 that realisation on the investors’ part and the stagnation that was until now only a perception became a reality,” he said.

Realty analysts say sales volumes are expected to dive further south as developers persist on holding on to their steep prices and buyers anticipate a further fall with current rates being beyond reach. According to Akshay Kumar, managing director of Parklane Property Advisors, the market is in a corrective mode and the downward drift will continue for another 12 months.

“Between 1992-96, the market ran up the same way it did during 2003-07. Post-’96, the volumes dropped by 50%. This time again it is expected to drop substantially though not so steeply. The demand is now extremely sluggish and customers do not want to stick out their necks and transact at prevailing rates,” he said.

In fact, comparative figures for the month of April since 2006-07 show that there has been a drastic 30% drop in transactions this year as compared to three years ago. There were only 5,289 transactions last month as compared to 7,471 in April 2006-07.

Signs of the sluggish market were visible when a recent auction of plots at the Bandra-Kurla Complex turned out to be a damp squib. Just a year ago, a plot of land in the same place had become the national indicator of the euphoric real estate scenario.

“Developers who are not able to sustain for another six months will set the valuation. Prices have peaked too fast over the last six years, so a correction was inevitable. Besides peaking of values, when global factors showed signs of stress even the investors’ segment started withdrawing towards the end of 2007,” said Dutt.

The government, Dutt said, has now started sending signals to an overheated market by taking measures to curtail liquidity in the market and speculation in real estate. “These include controlling the Foreign Direct Investment in the sector as well as imposing higher interest rates. When the market recovers this time, there will be a more healthy and steady growth than the quantum leaps we saw until now,” he said.