Housing prices firm up across cities;Bhopal posts 34% increase, Delhi 17%

NEW DELHI: House prices have displayed a rising trend in 12 Indian cities in the April-June quarter with Bhopal posting the highest gains, a survey by the National Housing Bank (NHB) has shown.

Experts say the demand for property in major cities across the country had dipped after the Reserve Bank of India (RBI) raised interest rates 11 times since March 2010 to tame inflation. The sharp increase in borrowing costs had kept buyers on the sidelines. But the NHB Residex which tracks housing prices in 15 cities shows prices are firming up compared to the January-March quarter. Banks have raised their lending rates sharply in the past few months. Several banks have witnessed a moderation in the demand for home loans as high interest rates hit sentiment.

Bhopal leads the pack with a gain of 34.13% followed by Faridabad which has witnessed an increase of 33.33%. Housing prices in Kochi have risen 24.42%, Surat 16.41%, Delhi 16.67%, Chennai 13.76%, Hyderabad 9.6%), Bengaluru 4.5%. The financial capital Mumbai has shown an increase of only 3.4% followed by Ahmedabad 2.4%, Lucknow 1.9% and Pune 1.35%.

Experts say that the increase in housing prices may not be sustainable against the backdrop of high interest rates. "Demand for housing may remain depressed in some areas. The price increase may not be uniform across the country," said D K Joshi, chief economist at ratings agency Crisil.

The NHB Residex showed that only 2 cities have seen a decline in prices over the previous quarter. These include Kolkata where prices dipped 8.05% and Jaipur 4.47%. The capital of Bihar, Patna did not show any change over the previous quarter.

The index helps the consumers and property buyers and borrowers in their decision-making by enabling comparisons over time and across cities and localities and the emerging trends in the property market.

The NHB Residex has been prepared for 15 cities and takes into account the price trends for residential properties in different locations and zones in each city, according to the classification devised for evaluation. The classification has been designed to give a representative Index for each city based on the transactions in the market and data collected from various sources. The trends seek to bring greater transparency in the property market.

The Residex for the January-March quarter, which was released in July, had shown that property prices rose only in six of the 15 cities covered by the residential price index-a situation similar to what was witnessed at the peak of the global financial crisis.

Source:- Economics Times