Property Prices Plunge Across India

Published on Aug 28, 2013
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The rising interest rates, liquidity tightening in the banking system and slowing down of economy have badly affected the real estate sector. As the demand for residential real estate has softened, its prices across the markets in India have started showing a declining trend.

R V Verma, CMD of NHB, said rising interest rates have adversely affected the demand from end-users, which led to rise in the inventory of unsold property. As builders have to meet the loan repayment liability as well as complete the already started projects, they find it more prudent to cut prices to sell the units and generate cash.

Of the 26 cities surveyed by the National Housing Bank (NHB), as many as 22, including Delhi, Mumbai, Pune, Bangalore and Chennai, saw a drop in property prices during the April-June quarter, compared with the first quarter of this calendar year. This is the first time in recent years that residential unit prices have fallen in so many big cities and could be a sign of developers resorting to cuts to spur demand in a slowing market.

According to the NHB Residex, compared with the previous quarter, the biggest price fall in April-June 2013 was seen in Ludhiana, of 5.99 per cent. It was followed by Indore (5.64 per cent), Vijaywada (5.43 per cent), Hyderabad (4.55 per cent), Kolkata ( 4.06 per cent), Guwahati (3.92 per cent), Kochi (3.37 per cent), Patna (3.29 per cent), Coimbatore (3.26 per cent), Ahmedabad (3.13 per cent), Faridabad (2.42 per cent), Chennai (2.26 per cent), Jaipur (1.79 per cent), Chandigarh (1.55 per cent), Delhi (1.49 per cent), Bhopal (1.30 per cent), Meerut (1.05 per cent), Bhubneshwar (1.02 per cent),
Bangalore (0.92 per cent), Pune (0.90 per cent), Raipur (0.65 per cent) and Mumbai (0.45 per cent).

Verma too argued that the declining trend in the real estate prices is good for both builders as well as end-users. As the cost of money has gone up and the chances of making money in the short-term are not very bright, the investors are absent. This will be a positive for end-users to buy house.

Verma added that if prices come down, transactions will increase, which would improve the cash flow in the sector. In 2008 and 2009, when the entire country was reeling under the global financial crisis, real estate came out of it unscathed mainly because of its strategy to cut prices and increase turnover.