Property price keep appreciating even as buyers keep away
Even though the demand in the real estate market remains sluggish, property prices have seen a rise. National Housing Bank (NHB) data shows that in the metros, Delhi and Mumbai have recoded property price appreciation of 33.3 per cent and 22.65 per cent, respectively, through the last two and a half years.
Jaipur has topped the list of cities in terms of price rise. Property prices in Jaipur have seen a rise of 64 per cent. Even though the sales have been declining, realty prices across 12 major cities have been rising since April 2011. Out of the 15 cities covered between April 2011 and December 2013, only three – Kochi, Bhopal and Faridabad – have recorded drops in property prices.
NHB Residex (the index is based on actual lending towards residential property by banks/financial institutions) shows Kolkata to have recorded the least appreciation (At 1.03 per cent) in prices.
Price appreciation being a combination of many factors such as cost of construction, inflation and land costs, the appreciation would have been much higher had a slowdown not hit the economy, they added, say experts.
Commenting on the statistic, Chairman of NHB, Mr. R V Verma says excluding the Delhi National Capital Region (NCR) and Mumbai, the market is functioning efficiently. “Demand is pulling up prices in most cities. Also, there is an inflationary cost attached to it. Credit is easily available in small cities — tier-I and tier-II. Housing loans are going up; there is growth of about 20 per cent.”
Verma further said, “In the coming period, people expect interest rates and prices to rise, which is why this is the right time to buy property.”
Founder and chief executive of real estate research company PropEquity, Samir Jasuja, says,
“Despite the slowdown, there are green shots in many micro markets, which continue to give significantly high returns. Markets in various cities have seen price appreciation of 50-150 per cent since 2008-09.”
In markets such as Delhi-NCR and Mumbai, the investors hold on to properties which leads to a price rise in these regions. This results in end users not being able to buy the property. “This also creates barriers for new launches/construction at lower prices in these areas,” said a real estate analyst.
Consulting firm Liases Foras says, for the December 20123 quarter, the inventory (months required to clear the stock at the existing pace of absorption) Pan India stood at 30 months. The Mumbai Metropolitan Region is said to have the highest inventory of 46 months. Inventory of eight months shows a healthy real estate market.
Executive director (residential services) of Cushman &Wakefield, Shveta Jain, says, “Though activity has come down, we are now seeing more healthy transactions. Speculative investments/activities have also slowed, which is a very good sign. The market is more mature now.”
Jain further said that In the high- and mid-end segments, price appreciation across India stood at an average 22-23 per cent through the past year.
Source: Business Standard
Cushman & Wakefield, Delhi and Mumbai, Liases Foras, Mr. R V Verma, Mumbai Metropolitan Region, National Housing Bank, NCR, NHB, PropEquity, Property Prices, Samir Jasuja, Shveta Jain, Tier-II
