Indian residential realty market 2012: A review
High prices of properties is the major concern for home buyers across India. Though unsold properties are piling up, developers are reluctant to reduce rates.
As per the data from the NHB (National Housing Bank) Residex index which tracks price movements in the residential segment in 20 cities across India, the rise in property rates over the last few years seems to have slowed down or even reversed in many of the cities.
Properties in major cities of India remained unaffordable due to hike in property rates over the past few years. But the year 2012 did not see much growth in the sector.
Rates of residential real estate in nine of the 20 cities as on September 2012 was lower than in January 2012. Around 11 cities witnessed price hike among which 10 cities saw a growth of less than 5 percent. If the Indian real estate does not pick up a sharper speed, then the returns from the sector would see a steep downfall.
In 2011, the residential realty prices had significantly increased in nine cities. But 2012 realty’s performance remained constant without any growth.
Jaipur witnessed around 33 percent rise in real estate prices in 2012. It is a result of city catching up from a low base. The price of properties in Jaipur had steadily declined over the years. The index for the city was 36 percent lower in December 2011 compared to the index of 2007.
Hyderabad too witnessed a rise in property rates in 2012. The city which had been seeing sloping realty rates over the past few years saw a 6.3 percent rise. This kind of positive growth indicates more value buying in real estate in 2012.
There are many cities which had been seeing continuous hike in property prices earlier, but observed a marginal growth or fall in 2012. For instance, in Kolkata, prices increased by just 0.5 percent, showing a slight growth. The prices more than doubled in cities like Bhopal and Faridabad between 2007-2011, but slumped in 2012.
But Chennai, where prices had almost tripled between 2007 and December 2011, bucked the trend. The realty rates in the city were mostly end-user driven. Prices increased by 5.4 percent till September 2012 which is very less compared to growth observed in the past.
Even though the biggest real estate markets of India, Delhi and Mumbai witnessed price-hike, the rates were much slower than the earlier years.
Among the metro cities of India, only Bangalore witnessed a fall in prices. Bangalore which had seen constant realty prices from 2007 to 2011, observed a fall in property rates in 2012.
Pune, among the non-metros witnessed highest growth of around 9.2 percent while Surat observed decline of around 9.2 percent between December 2011 and September 2012.
On the whole, real estate across various cities in India witnessed moderate growth in 2012. However some locations saw high growth.
Residential real estate rates of Nala Sopara and Pokaran Road, located in the outskirts of Mumbai, have seen tremendous hike of 50 and 65 percent respectively in 2012. The reason for this high growth is expected to be due to the affordable range of houses in these areas, which are not available within the city.
Suburban localities of Chennai, like Guindy, Ashok Nagar and Chetpet which have good connectivity to metro, observed a 26 to 32 percent hike in the rates of residential real estate.
Factors such as affordability, developing infrastructure, low rates, availability of land parcels and proximity to employment hubs greatly influence the prices of residential real estate of an area.
Developers reluctant to take up new road development projects
Indian real estate, National Housing Bank, prices of properties, properties in Jaipur, real estate market of India, Real estate prices, Residential real estate, residential real estate in india, Residential segment, Residex index
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