Property rates up 17% in last fiscal
Property prices in India have shown a reasonable uptrend in the last 12 months. As per the March 2010 release of 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%. 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% and 28.1% respectively Delhi rose by 6.8% 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%, 2.5% and 1.4% respectively over the last one year.
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 long term high value-purchase decisions. With the Indian economy showing sign of revival and consumers becoming more confident about their future earnings, the property prices started rising in the second half (July-December period); with the index reaching 1128 in December 2009.
The month of November and December saw two interesting trends. Firstly, developers property in Mumbai, Delhi and Bangalore increased the prices of their existing projects. Secondly, new launches happened at prices significantly higher than the prevalent rates.
Aditya Verma, VP and Business Head, Makaan.com said, "Going forward, the signals from the economy are quite positive - the Budget for FY11 has been received positively, there is overall optimism in all sectors, job visibility is better among the salaried class. Realty sector is seeing the effects of this in the form of 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."
The Index is based on minimum database size of 20,000 data points every month and the analysis has been drawn over a period starting January 2009. The complex algorithm takes into account the property prices as base and then factors in the demand and supply of residential properties for each of the cities covered by it. Care has been taken to give weight age to cities in line with the size of underlying property market.