Prices rise by17 per cent

Prices rise by17 per cent

Prices rise by17 per cent

New launches across cities signal optimism in the Indian realty sector

Property investors and the real estate industry players can heave a sigh of relief; property prices in India have shown a reasonable uptrend in the last 12 months. According to tge Makaan.com Property Index (MPI), the national index stood at 1117 compared with 954 in the corresponding month last year, an increase of over 17 per cent. The rise in national index is attributed to the hardening of property prices in the western markets of Mumbai and Pune, which rose by 29.4 per cent and 28.1 per cent, respectively. Delhi rose by 6.8 per cent in the same period. Putting pressure on the index were the property price movements in southern cities of Hyderabad, Bangalore and Chennai that corrected by 3.2 per cent, 2.5 per cent and 1.4 per cent, respectively, over the last one year.

Here's an analysis of the trends in property price movements. Prices fell in the first half (Jan-June period) of 2009 when the index dropped from 1000 to 946. This period was marked by complete lack of interest among investors and home buyers in making a long-term high value purchase decision.

With the Indian economy showing signs of revival and consumers becoming more confident about their future earnings, the property prices started rising in the second half (July-Dec period); with the index reaching 1128 in December 2009. The month of November and December saw two interesting trends. First, developers in Mumbai, Delhi and Bangalore increased the prices of their existing projects. Second, new launches happened at prices significantly higher than the prevalent rates. This rise was too fast and too high and many home buyers were caught off guard with this unexpected jump in rates. This led to lower transaction during the January to March 2010 period. The national price index moved in a narrow range from 1080 to 1117 during this period, capturing the mood of the market.

Delhi Property Index

The Delhi index in March this year stood at 1,005 compared to 942 in the corresporiding month last year, an increase of 6.8 per cent. This increase can be attributed to the overall improvement in sentiments among the homebuy-ers. Delhi, like most other cities experienced a sudden increase in property prices during the November-December period, which led to tapering off of demand in the following months. In the last one quarter, the Delhi Index has moved from 1088 in Dec '09 to 1005 in March '10, registering a 7.6 per cent drop.

Commenting on the findings Aditya Verma - vice president and business head, Makaan.com, says, "the signals from the economy are quite positive. There is overall optimism in all sectors, job visibility is better among the salaried class. The realty sector is seeing the effects of this in new launches across cities. For sustained development, it is critical to maintain property prices at the current level. Attempt to increase prices can lead to fall in demand."

Last Updated: Tue Aug 13 2013

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