'Mumbai home prices down 9.1% in the year ended March '12'

MUMBAI: 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.

Although the value of prime property in the world's key cities rose 1.4% in the year to March 2012, on quarterly basis it took a hit. In the quarter ended March, the index slipped 0.4%, registering its first quarterly drop since the depths of the global recession, said the report released on Monday.

"Affordability is relative. The real issue plaguing the market is lower customer confidence due to various factors like interest rates rise and regulatory issues," Anand Narayanan, national director (residency), Knight Frank India. "Although some of these have moved into neutral zone; interest rates have taken a directional 'U' turn, things would be upbeat once there's good news on income (salaries and bonuses) front."

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.

The report also showed that Nairobi (up 24%) was the strongest performer in the last 12 months, while prices in Dubai (up 4%) rose the most in the last 3 months.