New Delhi:  India’s most expensive property market, Mumbai, might see a deep plunge of around fifty percent in property prices. This can be attributed partially to the government’s crackdown on black money in the sector, according to a report by a brokerage firm called Ambit Capital.

“Our visits to five property registration offices in Mumbai suggest a sharp drop in the registration of new residential properties. Also, new launch volumes are down 40-80 percent on a pan-India level,” said Ambit’s Saurabh Mukherjea and Sumit Shekhar in the report.

Property prices in metro and smaller cities have fallen between 7-18 percent from April last year. According to the same report, there was a massive fall of about 40 to 80 percent in the new launches in the last quarter of 2014-15.

A major reason is attributed to the fact that around 30 percent of real estate development is financed by black money, the report said. Also the government’s move to curb it through legislation has slowed investment by high net-worth individuals, many of whom are evenseeking tax residency in Dubai and Singapore.

Demand for new houses has been sluggish at current prices, and inventory is piling up. Mumbai and Delhi will take 11-14 quarters to clear existing property that is available for sale. That’s a long delay compared with a healthy real estate market that would need 4-6 quarters.

In addition, banks have curtailed lending to developers. “The Reserve Bank of India data suggests that the banking system seems to have turned the tap off for property developers over the past year. This has, in turn, made developers either stop construction or cut prices,” the report said.