Housing prices have declined in eight major cities by up to 15% during January-March period of this year due to a slowdown in property demand, according to the latest data of the National Housing Bank. The prices, however, have increased in six cities, including Delhi, while rates remained flat in Patna.
According to the data, housing prices have fallen the maximum in Kochi by 14.92% in January-March period compared to the previous quarter. Bangalore at 12.87% is next, followed by Faridabad at 6.37%, Hyderabad at 4.6%, Surat at 3.76%, Bhopal at 3.55% and Jaipur at 2.63%. Kolkata showed a marginal decline. Housing prices rose in Pune by 5.02%, Lucknow by 3.09% and Delhi by 2.64%. Marginal increase was seen in Ahmedabad, Chennai and Mumbai.
NHB, which regulates housing finance firms, tracks the housing prices in the selcted 15 cities. It has been releasing housing prices index called ‘NHB Residex’ since 2008.
“The movement in prices of residential properties has shown a mixed trend in 15 cities covered under ‘NHB Residex’ in January-March 2011,” NHB Chairman and Managing Director R V Verma told reporters here.
Verma attributed the fall in prices in some cities to slowdown in housing demand owing to high property prices and rising interest rates.
RBI had raised the repo and reverse repo rate for the 10 times since March 2010 to control inflation.
Verma said the age and earning profile could also possibly be one of the factor for fall in prices, particularly in cities such as Bangalore where there is more demand from younger generation who could postpone their decision to buy homes.
According to data, the housing prices have increased in all the 15 cities during January-March 2011 as compared with the same quarter of 2010.
Asked about housing prices outlook, NHB CMD Verma said, “We would expect prices are reduced. In the oversupply market, there is a scope for prices to come down”.
He noted that developers should allow the market to function efficiently looking at demand-supply scenario.
Pointing out that there is a situation of oversupply in many markets, Verma said: “We do expect market to slowdown. This should result in price correction”.
On interest rates, he said, “indications are there that it may continue to rise”. NHB has to be cautious and closely watch the development also from the regulatory prospective, Verma said.
Asked about liquidity crunch to developers, he said: “It will help if liquidity is generated through unsold inventories with the developers.”
