Ramesh Pathania/Mint
Ramesh Pathania/Mint

Property prices stable, according to Residex

Only slight price movement in 11 cities in the Apr-Jun period compared with three preceding months.

Property prices seem to be stabilizing with slight to negligible upward price movement in 11 among 20 cities in the April-June period compared with data for the three preceding months, according to the National Housing Bank’s (NHB) Residex, an index of property prices covering mainly the primary market.

Prices in Pune saw the maximum jump of 10.5% in the same period among metros and tier II cities. Bangalore and Patna followed Pune, with a rise of 8.7% and 8.6%, respectively. This year, the Residex has added five more cities—Bhubneshwar, Guwahati, Ludhiana, Vijayawada and Indore. “Except for a few cities, including Pune, Bangalore and Patna, other cities have shown a stable trend in prices," says R.V. Verma, chairman and managing director, NHB.

The NHB Residex, which was launched in July 2007, measures property prices every quarter. The index currently captures data submitted by a variety of sources, including housing finance companies and real estate agents, for 20 cities. It has plans to widen the index to 63 so-called tier I cities and state capitals in the future. The index for Delhi has also been expanded to cover Gurgaon, Noida, Greater Noida and Ghaziabad, thereby expanding the coverage to the entire National Capital Region (NCR). “We will add five more cities within this year," says Verma.

Large metros Mumbai and Delhi too saw small increases—3.7% and 2.6%, respectively. Compared with the year-ago period among the recorded cities, property prices have risen in eight cities.

Why are prices stabilizing?

Commenting on the price stability, Verma says, “Factors such as rising inventory, excess supply and pressure to sell the unsold units have forced developers to keep the prices stable."

Agrees Samarjit Singh, managing director, India Homes Pvt. Ltd, a pan-India real estate consultant firm. “High interest rates and inflation has kept the prices under control till date," he says.

What it means for you

If you are a prospective buyer, this may be a good time to invest in under-construction projects.

Says Singh, “Current inventory (unsold units) in the market is cheaply available for sale as land bought for these projects were bought at cheaper rates. Also, the price stability or the softening of prices is the last in the series of events. Going forward, prices are bound to increase around the festivities in the month of October-November." Usually, there is a flurry of launches around these months.

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