Falling prices bring homes closer

At the same time,the remaining six cities Bengaluru,Mumbai,Faridabad,Chennai,Jaipur and Pune have seen the housing prices jump by up to 14 per cent in January to March 2010,as compared to July-December 2009,says NHB.

The realty sector experts argue that there is no single pricing trend that defines the housing sector across the country,rather local conditions have dominated the individual markets. There is no visible national trend in the way prices have moved in the last 12 months. In some cities,prices have gone up because of vibrant local economy,whereas others are emerging as hot spots for investors, said National Housing Bank executive director RV Verma.

Here8217;s a closer look at the way prices have moved in some of the key cities since the recession began in 2008:

Delhi

The city bursting at the seams puts a high premium on any land and property available within its precincts. But surprisingly,the sheen wore off the residential pricing,with prices dipping by 20 per cent from July-December 2008 to January-March 2010. Agreeing with the trend,the country8217;s largest developer DLF said that from the peak levels,residential prices in the Delhi NCR region have almost come down by 25 per cent. Developers have brought down the prices so that speculators stay off the market and only genuine end users enter the housing segment, said a DLF spokesperson. Delhi Development Authority8217;s plans for additional housing solutions next year will considerably ease the pressure on demand,Verma added.

According to JLL,developers announced launch of 43,074 residential units during April-June 2010,hike of 21 per cent over the previous quarter. The index for January-March 2010 period stood at 104,down from 130 in July-December 2010. JLL echoes the NHB view,and estimates that the prices have risen by 10-15 per cent since the lowest ebb in 2008. As compared to Delhi,the NCR region,particularly prime areas of Gurgaon have risen faster, said JLL research head Abhishek Kiran Gupta.

Bengaluru,Mumbai,Chennai and Pune

The upswing in the housing prices in these four cities reflects the enhanced demand for housing by end-user groups as a result of better employment opportunities. In Bengaluru and Chennai,prices rose by almost 10 per cent and Mumbai saw a marginal increase of 6 per cent in January-March 2010 period as compared to the July-December 2009 period. Pune saw the maximum price rise of 13 per cent in the same period. There is a re-generation of housing demand in these cities as the IT sector growth revived,leading to a positive impact on salaries. As per our analysis,it8217;s mostly the young couples in these cities who are driving the demand for housing, Verma said. The housing market is seeing demand from actual user,even though investors and speculators are gradually entering the market,said Gera Developments8217; CMD Kumar Gera. According to Gera,the residential market in these areas is seeing more movement as compared to the commercial one.

While Chennai saw a rise of mere 10 per cent in the supply of residential units in the second quarter of this year as compared to the previous one,Mumbai and Pune registered 64 and 144 per cent growth respectively,according to JLL. Bengaluru,on the contrary,saw a decline of 70 per cent in the housing supply in the second quarter of this year as compared to the previous one.

Faridabad and Jaipur

These two cities,according to NHB8217;s analysis,have emerged as investment destinations. The sleepy city of Faridabad,lying at a distance of 30 km from the heart of Delhi,reported a 47 per cent rise in housing prices from January-June 2008 levels to January-March 2010. At the same time,Jaipur witnessed a mixed trend; prices rose by almost 5 per cent in January-March 2010 from July-December 2009 period. But,when compared to the Jan-June 2008 period,the prices fell by a whopping 44 per cent in January-March 2010.

In Faridabad,prices rose as it started on a relatively smaller base. Second,the market is far from saturated,emerging as an investment destination. Third,its proximity to Delhi gives it an edge, said Verma. Faridabad is witnessing hectic construction activity,thereby an upward movement in pricing is natural,feels Delhi-based developer Assotech8217;s managing director Sanjeev Srivastava.

On the other hand,even though Jaipur has been seeing construction activity for a long time,the scale is relatively smaller than other metros. Jaipur is witnessing land acquisition and movement in its real estate market,not on the account of local economy or employment generation but purely for investment purposes,Jaipur being the capital city, Verma said,based on the NHB8217;s analysis.

Surat,Kochi and Kolkata

These three cities have seen a fall in housing prices of up to 15 per cent in the January-March 2010 as compared to July-December 2009. While Kolkata and Surat have seen the sharpest fall of 15 per cent,Kochi witnessed 8.4 per cent. The decline in Kolkata is quite heavy from June-December 2009 levels. Kolkata is seeing a correction in its realty market which had reached peak levels in July-December last year, said Verma.

NHB analysis states that in case of Kochi,the urban rural continuum does not fit with the economic zone. In Kerala,cities extend into rural areas,so no there is no clear divide. Therefore the increase in demand in housing will not reflect in the pricing as city keeps expanding, said Verma. Kochi has witnessed a sharp fall of almost 28 per cent since January-June 2008,when the prices were at the peak. In Surat,the residential price index stood at 104 in January-March 2010,down by 19 points as compared to July-December 2010. l

smita.aggarwalexpressindia.com