Change in market mood, home prices to rise
Residex, an index released every quarter by the National Housing Bank (NHB) with technical support from RBI, indicates that real estate prices have shown an increase in 16 out of 26 cities. The index is the most authoritative residential housing price index. The indication is that the prices may be finally bottoming out.
Delhi and Bangalore saw prices rising during the quarter ended December 2013, while in Mumbai the prices stopped falling for the first time since March 2013. Prices have risen for the first time in Bangalore and Pune, since the last quarter of FY 13.
The biggest rise was in Nagpur (8 per cent over the previous quarter), followed by Guwahati (7.4 per cent) and Pune (7.3 per cent). In Patna residential prices rose significantly by 6% over Q2, while those in Delhi, Chennai and Bangalore rose 3.2%, 3.8% and 3.7% respectively.
However, prices continue to fall in Lucknow (by 3.1% from Q2), Jaipur (2.8%), Chandigarh (2.1%) and Kolkata (1.5 %).
The trend indicates that home prices are rising despite no decrease in interest rates. Governor Raghuram Rajan raised benchmark interest rates to 8%, in the third quarter monetary policy released in January, an increase of 25 basis points.
The chairman of NHB points out that there is a strong demand from potential home buyers.
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