Metropolitan cities might still prove to be a better bet if you are planning to buy a house. According to Residex,a residential property price index by the National Housing Bank,prices in smaller tier I cities have inched up faster compared with the metropolitan cities. Residential property prices in Delhi in the second half of 2009 are still down by more than 6 per cent compared with the January-June 2009 levels. Prices in the IT capital,Bengaluru,and the financial capital,Mumbai,havent moved significantly in 2009. During July-December,prices rose by 1.72 and 1.61 per cent respectively compared with January-June 2009.
Prices in Bangalore were already at high levels. In the first half of 2008,prices corrected here a little. But slowdown in the global economy is a major contributor for dragging the residential property prices to such low levels. Information technology companies were hit hard during 2008 and 2009,leading to job losses across the board in this sector. This in turn pulled the demand for housing significantly. Demand in these cities has still not picked up, said NHB,deputy general manager,AP Saxena.
Barring Jaipur and Kochi where property prices in the second half of 2009 were down by 11 per cent and 7 per cent respectively compared with Jan-Jun 2009,rest of the smaller cities have seen a whopping rise in prices. Kochi is a port city. The prime reason why demand hasnt really picked up there might be again because of the slowdown. Volatility in imports and exports,might be the biggest contributor to the subdued demand, said JLLM chief executive officer,business,Sanjay Dutt.
Cities such as Surat,Pune,Lucknow,Patna and Bhopal have seen property prices zoom by 10.81 per cent,13.59 per cent,14.42 per cent,11.21 per cent and 16.55 per cent respectively. A lot of developmental work in Bhopal has catalysed property prices. Faridabad,where prices are up more than 6 per cent,too,has picked up. After Gurgaon,people are now looking at this satellite city and due to its proximity with the capital,prices are bound to rise, added Saxena.
Experts say real estate prices at these levels are not sustainable and a correction is expected. We expect prices to correct. However,it will not be across the board but in select pockets. Developers are likely to offer more discounts in the luxury or high-end segment. We do not expect any favourable movement in the mid-income or affordable housing segment. Prices in these segments are likely to remain at elevated levels,said Dutt.