‘If one searches hard enough it is possible to find God, but not a nice flat in Mumbai”, goes a popular saying and over the years this has come to be true not just about Mumbai, but about all the big cities in India.

However, of late, property prices have fallen in the metros in double figures, as developers are finally being forced to pull them down.

During the real estate boom in India, among all the metros, it was Mumbai, which saw the steepest appreciation in property prices. In many cases, prices rose beyond affordable limits and, to most people, buying a house seemed almost unimaginable.

However, today, despite the city witnessing a correction of some 16 to 36 per cent, the same people are expecting real estate prices to fall by another 30 per cent.

Goldman Sachs believes that property prices across Mumbai suburbs would need to fall by about 30 per cent for affordability to improve. “We believe most price cuts are in the range of 16 to 26 per cent with the exception of two or three developers, who have cut prices by more than 30 per cent. In our opinion, the move is in the right direction but the extent of price cuts

may not be enough to tempt buyers,” said a recent Goldman Sachs research report.

Aniket Khanzode, a Mumbai-based merchant navy officer, sums up the ground reality.

“I have been looking for a house for quite a while. It’s not as if only builders are quoting more. I saw a 1BHK house in Goregaon, recently. This place was located far away from the metro yet the owner was demanding around Rs 35 lakh. I was willing to buy it for Rs 27-28 lakh, but the owner refused to budge,” he said. Khanzode is willing to wait for the price to drop further, something, he feels is inevitable, given today’s market scenario.

This story finds an echo in other metros. Recently, real estate major DLF led a wave of residential price correction in Bangalore, reportedly slashing rates for a project on Bannerghatta Road by 32 per cent. Since then, property rates have fallen from Rs 2,775 per sq ft to Rs 1,850 per sq ft.

Bangalore-based Sobha Developers had announced an 8 per cent reduction in prices across all its projects. Another Bangalore developer, Golden Gate Properties, is reportedly selling condominiums at its Golden Grand project at 75 per cent of the property value, with an option to pay the balance over a period of five years.

In the north, most property watchers say that prices in Gurgaon, Noida and NCR would fall further. “With builders now taking a serious look at pricing, there is sure to be marginal drop by the end of June,” said Harsha, a Gurgaon-based property broker. He added that in many areas prices have dropped as low as they were four years ago.

ICICI Bank CEO Chanda Kochar has reportedly said that a 15 to 20 per cent correction in property prices is still needed.

“Affordability has started to improve given the decline in residential property prices (down 25-30 per cent from the peak) and reduction in mortgage rates. Real estate consultant Jones Lang LaSalle Meghraj (JLLM) expects the residential market to recover by mid-2010, although near-term demand is expected to be muted given a weak job market. Off-take for new launches priced at Rs 2,000 PSF levels remains one of the key data points to watch out for over the next few months. Bangalore is the most favoured micro market given the lower level of residential prices/rentals,” said Anuj Puri, country head and chairman, JLLM.

Analysts feel that the second quarter of 2009 will see more price cuts as the market will show more volatility. In turn, builders will be forced to correct their price realisations even further.