How the Seventh Pay Commission May Impact Buyers and Builders in Mumbai

2. Some builders in Mumbai are as optimistic about the year to come as they had been of the past few months. It seems that homebuyers and builders in Mumbai have reached a new price equilibrium that is a bit lower than it had been before real estate in Mumbai began to show signs of revival a few months ago. According to some developers in Mumbai there are good times ahead for both them as well as for buyers due to the execution of certain plans by the central government in New Delhi. It is expected that the lower equilibrium in the price of property in Mumbai will play favorably to both buyers and sellers. The sales of the larger numbers of existing inventory in the procession of real estate developers inMumbai to homebuyers in the city is expected to be profitable to developers as they shall be able to offload a larger share of inventory then they would have been able to at higher prices.

3. Though the profits earned by developers will not be as great as they would have been had the price of the real estate not been lowered, those who wish to buy property in Mumbai are likely excited by the lower prices and are eager to buy property in Mumbai for the first time. An additional factor which is certainly beneficial to a builder in Mumbai is the recent decision by the pay commission which will put more money in the hands of homebuyers all across the country. However, in this regard a caveat may be warranted as though the nation has a very competent government at the helm, the decision to pay out larger regular incomes to millions of households all across the country shall have an impact upon inflation in the country, the effects of which may in the long term may actually lead to higher prices for most commonly used items.

4. Though to the common man an increased payout by the central government seems no different than an increase in wages for him; similar payouts to millions of households tends to drive up prices as there is more money in the economy chasing the same number of goods produced. How such an increase in prices shall impact the future real estate trends in Mumbai most likely depends upon the numbers of buyers for real estate in Mumbai; for instance if there is an increase in demand for property in Mumbai specifically due to the recent decision by the pay commission to increase wages, then one may make an educated guess that the price of flats in Mumbai too would rise as there would be more money in the hands of homebuyers chasing the same limited number of flats priced in a similar segment. The number of such units is highly unlikely to change rapidly enough to cater to the new increased demand from buyers infused with cash due to the decision of the pay commission.

5. Hence thought the decision by the pay commission is a boon for many of the citizens of the country who have served the nation with dignity and honor, its larger macroeconomic implications for the country may prove beneficial in some respects only if certain other policy decisions are enacted by the government. There is cause for celebration among those eyeing new projects in Mumbai with the hope of purchasing their first home, yet over time higher wages across the board leads to more inflation which may become visible in higher prices for basic goods used by hundreds of millions of households across the country.