TNS

A question that has been on the mind of many: Have real estate prices across major cities in India reached subdued levels? Internal data and some people from the industry highlight that prices in Delhi NCR, Mumbai, Chennai and Bangalore have either witnessed a slowdown or have remained unchanged during the first two quarters of calendar year (CY) 2013.

It is believed that the affordable category, primarily the sub Rs 20 lakh budget range is performing much better across major cities in India in comparison with the budget range of Rs 50 lakh and above.

Reasons for this change in the overall economic conditions are noticeable. The strict monetary regulations due to high inflation, RBI not releasing funds easily making home loans difficult to get, impending elections and property prices reaching peak levels by the end of last year have propelled this turn around.

As per our data, the searches on the site under the Rs 25 lakh budget category were the maximum, standing at 41 per cent during the July to December 2012 period. Second most popular category is Rs 25-50 lakh budget range, with 29 per cent users searching in this type. The Rs 50-75 lakh budget range came in third in the search statistics, as per the site.

Statistics reveal that Delhi has seen a consecutive fall in the last two quarters in average residential capital values. Prices fell by 10 per cent from Q4 2012 in CY 2012 to Q1 2013 and by 15 per cent in Q2 2013 from the previous quarter. NCR, on the other hand, witnessed a marginal 1 per cent rise in Q1 2013 compared to Q4 2012 and 3 per cent increase in Q2 2013 from the previous quarter.

In Mumbai, the first quarter of this year was still better but Q2 saw a drop of 4.4 per cent to Rs 13,867 per sq ft in average capital values compared to Rs 14,516 per sq ft.

Chennai witnessed a bounce back in capital values in Q2 2013 after seeing a drop of 12 per cent in Q1 2013 from Q4 2012.

Bangalore witnessed a negligible rise in average capital values in Q2 2013 to Rs 4,300 per sq ft from Rs 4,333 per sq ft in the first quarter.

Mumbai and Chennai

Mumbai and Chennai have seen a 20-40 per cent slowdown in transactions in the past 2 months. The market has performed well in these two cities from affordability point of view; however, the housing above Rs 50 lakh budget range has taken a hit.

The frontrunners in price rise in Mumbai are limited to

Western suburbs like Bandra, Khar, Santacruz, and

Thane, Palghar and Vasind (outside Mumbai city limits).

On the other hand, areas like Lower Parel, Powai, Malad and Andheri have seen subdued price levels as there is an abundance of supply and no matching demand.

Delhi NCR

In the case of Delhi, price levels across Delhi/NCR have remained stable, but the rate of increase might not have been as high as last year. Transactions, too, have witnessed a slowdown as compared to last year. Throughout 2013, property market across NCR is expected to be stable. The beginning of 2014 might witness a turnaround.

Bengaluru

Bengaluru market has performed steadily in the first two quarters of the year but not better than the last two quarters of 2012. North and East Bengaluru have benefited the most as the demand and price rise is witnessing an upward trend here. The holiday season last quarter and high price levels at the beginning of the year have dampened consumer sentiment for now.

The last two years have been good in terms of prices and transactions, and this year is likely to bear the impact of the high that the market has enjoyed in the form of uniform or subdued price levels.

Fact sheet

Affordable segment performing much better compared to Rs 50 lakh above budget range

Weak consumer sentiments due to stricter financing, high inflation and impending elections

More buyers for smaller ticket size

Suburbs are proving to be the high investment zones as against the city areas

Increase in raw material cost, labour and transportation costs is converting into higher price for residential projects

Source: http://www.tribuneindia.com/2013/20130706/real.htm#3

Author: Mr. Vineet Singh, Business Head, 99acres.com

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