1st of the series of report
Interest rate rises are beginning to bite in India, and housing markets in major cities weakened in 2010, says a report by the Global Property Guide. It says yet this hasn’t broken the clear pattern since the relaunch of the National Housing Bank residential property index in 2007. Successful growing cities have seen house prices rise rapidly (Chennai, Mumbai, Pune, Faridabad). Prices in some other cities have fallen strongly (Jaipur, Hyderabad, Kochi, Bengalaru).
The contrasts are really striking. House prices have more than doubled in Chennai from 2007 to today (with the index moving from 100 to 204). During the same period the house price index fell from 100 to 66 in Jaipur. According to the report one explanation is that cities relying mainly on electronics and manufacturing suffered most during the global financial crisis, while cities with offshoring and business process outsourcing (BPO) showed resiliency – but that is not the whole story, and does not explain the strong house-price falls over the past 4 years in Bengalaru (now recovering).
House prices still rising in some cities
Prices are still rising in Chennai (+11.5% on a quarter-on-quarter basis), and Bengaluru (India’s Silicon Valley and third largest city, +2.9%). In Mumbai and Katna, house prices were unchanged from Q2 to Q3 2010.
House prices fell q-to-q in eight of the 15 major cities covered by the NHB Residex. Declines ranged from -1.8% for Delhi, -2.8% for Kolkata to -21.3% in Surat (the capital of Gujarat state in eastern India). The Residex only started publishing quarterly figures in 2010; from 2008 to 2009 the index was updated semi-annually.
Compared to last year property prices are sharply up in five cities (Chennai +43%, Mumbai +27%, Pune +24%, Bengaluru +19% and Hyderabad +8.6%). Cities which suffered included Bhopal (-12%), Surat (13%), Kolkata (-7.6%) and Delhi (-4.4%).
Property prices in Mumbai’s luxury segment continue to surge. The luxury residential property index based on capital values rose 2.8% q-o-q and 14.9% y-o-y to Q4 2010, according to Jones Lang LaSalle (JLL), an international real estate consultancy firm.
