Ever since the National Housing Bank (NHB) started preparing residex – an index for tracking the prices of residential properties in 2007, Chennai has been in the news for steep increase in residential prices.
Over the past four years, housing stock prices have risen 2.18 times in Chennai, say NHB figures. But for a slight dip in prices between July and December 2008, primarily on account of the global meltdown, residex has been steadily heading northwards in Chennai.
The city overtook Kolkata, another overheated market a year ago. Over the past four quarters until March 2011, Chennai has topped the NHB survey, which has 15 other cities. Between January 2010 and March 2011, when the latest residex was released, apartment prices in the city have increased by close to one-third.
The only other major city to record a 30% increase in price is Mumbai. However, two smaller cities marched ahead of Chennai with Lucknow (40%) and Ahmedabad (46%).
There is hardly any place in Chennai’s prime locality of 20 km radius where prices have not shot up by at least Rs 1,000 per sq ft since January 2010. The cost of a two-bedroom apartment even in places like Maduravoyal or Virugambakkam that lie in the fringes of the city is Rs 40 lakh and above. Obviously, they are out of reach for middle-class families.
Even for the upper middle class, buying a house in the core city is becoming difficult. S Sundaresan, a senior bank employee said, “One should have a take home salary of Rs 80,000 and above to become credit worthy for buying a house and that too in the fringes of the city.”
Builders point out that demand is driving the prices northwards. The realty market leader DLF has also entered Chennai market with a couple of high-end residential and commercial property. The company believes demand has always been there and DLF has just been there to cater to the aspiration level of the globe trotters who want the best of amenities in Chennai.
