Property prices dip in major Indian cities

 Property prices in front-line cities such as Mumbai, Delhi-NCR, Chennai, Pune and Bangalore have seen depreciation during the quarter ended June 2013 compared to previous quarter, according to National Housing Bank’s recently released report.

The movement in prices of residential properties for the quarter April-June 2013 has shown declining trend in majority of the cities (22 out of 26 cities covered) ranging from 0.45% in Mumbai to 5.99% in Ludhiana, and rise in four cities ranging from 0.55% in Dehradun to 3.07% in Nagpur during the quarter April-June, 2013 in comparison to the previous quarter January-March, 2013.

Only four cities, that too tier II cities, have shown an increase in property prices, the NHB’s residential housing index (RESIDEX) showed. Maximum increase was observed in Nagpur (3.07%) followed by Lucknow (2.19%), Surat (1.43%) and Dehradun (0.55%).

22 cities have shown decline in prices over the previous quarter with maximum fall observed in Ludhiana (5.99%) followed by Indore (5.64%), Vijaywada (5.43%), Hyderabad (4.55%), Kolkata (4.06%), Guwahati (3.92%), Kochi (3.37%), Patna (3.29%), Coimbatore (3.26%), Ahmedabad (3.13%), Faridabad (2.42%), Chennai (2.26%), Jaipur (1.79%), Chandigarh (1.55%), Delhi (1.49%), Bhopal (1.30%), Meerut (1.05%), Bhubneshwar (1.02%), Bengaluru (0.92%), Pune (0.90%), Raipur (0.65%) and Mumbai (0.45%).

According to real estate experts, oversupply, coupled with high interest rates and sluggish economic growth are putting pressure on the real estate growth and developers are finding it difficult to sell their inventory. Some of them even started to offer various schemes and sops to offload their products.

Under pressure due to increasing input costs, non-availability of skilled and unskilled labours and unfriendly interest regime, realtors across the country are sitting on huge pile of inventory and are finding it difficult to clear it. 

However, developers are putting up brave front. They don’t admit that there is sluggishness in the real estate sector.

According to Sandeep Mehta, president of Confederation of Real Estate Developers' Association of India, Chennai chapter, there was no slump in property prices in the city, though the sales have slowed down a bit due to external factors.

Though from the advertisements appearing on the major newspapers, one can understand that most of the projects launched six months ago are still to be sold out. One of the leading builders is even organizing an exclusive exhibition to showcase his projects in Chennai, which were launched sometime ago. Some developers are even waiting for more than a year to sell their projects and not able to launch new projects due to cash crunch.

“The new launches in major cities have slowed down as realtors are adopting a cautious attitude and don’t want to make fresh investment in the unpredictable market,” says a real estate consultant in Chennai.

About unsold inventory, he said, many of the projects along the Chennai’s most sought-after Old Mahabalipuram Road, East Coast Road and GST lie unsold for months, but developers are putting up brave front and drumming up their success stories in print and online media. 

Some of them even announce new projects giving an impression that they have successfully sold out their previous projects. But, 10 to 30 per cent of the apartments remain unsold. Since developers would have realized their profits from the sold out portion, they don’t bother about the unsold ones and so don’t keep a definite time frame to clear those inventories.