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Property prices rise in key Indian cities in Dec quarter

Mumbai and Delhi lead the list with prices rising 9.6% in both cities
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First Published: Mon, Feb 25 2013. 03 40 PM IST
The previous quarter that ended September 2012 saw residential property prices declining in 11 of 20 cities including Hyderabad, Kolkata and Bengaluru, whereas Delhi and Mumbai saw an increase of 3.4% and 0.5% respectively over the preceding quarter. Photo: Mint
The previous quarter that ended September 2012 saw residential property prices declining in 11 of 20 cities including Hyderabad, Kolkata and Bengaluru, whereas Delhi and Mumbai saw an increase of 3.4% and 0.5% respectively over the preceding quarter. Photo: Mint
Updated: Tue, Feb 26 2013. 12 29 AM IST
New Delhi: Key Indian cities, including Mumbai, Delhi, Bangalore, Ahmedabad, Kolkata and Chennai, have seen a significant rise in residential property prices in the quarter ended December from the preceding quarter when they either remained stable or went up marginally, according to the National Housing Bank (NHB) Residex released on Monday.
Of the 20 cities covered by the Residex, prices rose in 18 during the quarter. Mumbai and Delhi led the list with prices rising 9.6% in both cities, followed by Kolkata (9.4%), Patna (9.4%), Kochi (8.8%), Surat (8.7%), Bangalore (8.2%), Lucknow (8%), Hyderabad (7.1%), Ludhiana (6.5%), Ahmedabad (6.1%), Guwahati (5.1%), Bhopal (4.9%), Bhubneswar (2.4%), Jaipur (2.4%), Vijayawada (2.2%), Pune (2.0%) and Chennai (0.6%).
The two cities that saw a decline in residential prices were Faridabad and Indore.
The quarter that ended September 2012 saw residential property prices declining in 11 of 20 cities including Hyderabad, Kolkata and Bangalore, whereas Delhi and Mumbai saw an increase of 3.4% and 0.5%, respectively, over the preceding quarter.
Constrained supply in most of the major cities, coupled with an increase in demand, may have led to the increased property prices, said R.V. Verma, chairman and managing director of NHB.
“Overall, there were not many projects taken up in the last quarter (Oct-Dec 2012) as developers wanted to clear their existing inventory first. So, there was no fresh supply, but the demand had been going up, which might have pushed up the prices,” said Verma, adding that input prices including labour costs have risen in the past few month, which may have contributed to the price rise. Experts said home prices have risen due to the overall positive sentiment in the hope of a favourable budget on 28 February, as well as infrastructure development in certain areas.
“The overall sentiment is that budget will not be harsh this year and some support would be provided to the real estate industry,” said Neeraj Bansal, director, real estate, KPMG. “The climate is turning towards positive direction, which has a strong co-relation with real estate activity.”
“It improved buyers’ sentiment as well, as they wanted to take a better deal before the prices shot up even further, taking advantage of falling interest rates, which also pushed up property prices,” he said.
Investor demand for residential projects has risen in areas that have got better infrastructure better than elsewhere, said NHB’s Verma.
“We can’t really distinguish between investor demand and retail buyer demand but because of the improved outlook, prices are moving up and the investor market is growing because of the speculation,” he said. “We have also seen good credit growth in the housing loan market of about 18% between April 2012 and December 2012 over a year-ago period because of lowering interest rates.”
Bansal agreed that the development of micro-markets is another reason property prices rise.
“The residential projects in micro-market areas such as Golf Course Road in Gurgaon, Yamuna Expressway in the National Capital Region and Navi Mumbai have created a pull factor generating demand from retail buyers, which in turn have pushed up the prices,” he said.
“Such developments are less adversely impacted when the sentiment is negative and gain more when there is a positive sentiment.”
Experts expect the trend to persist.
“The prices may continue to go up for some time, though we have to see what would be the impact of the budget on the real estate sector,” said NHB’s Verma.
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First Published: Mon, Feb 25 2013. 03 40 PM IST
More Topics: NHB | Residex | property prices | cities | real estate |
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