Property Prices in India: 2010 and beyond

Everybody dreams of owning a home and from current trends, it can be said that making an investment in housing properties in the metropolitan cities of India will be a lot wiser and cost-effective. The statistical presentation of the National Housing Bank (NHB) gives you enough reasons to believe so. The residential property price index suggests that small cities belonging to tier I segment have witnessed sharp rise in the prices as against the metropolitan cities.

If you are going to buy a house in Delhi, you will find the property prices of the city residences are still low by 6%. In fact, the IT and financial capitals of India such as Bangalore and Mumbai, respectively, have also not seen any significant shift in the price range. In the second half of the year 2009, the prices were marginally up between 1.72% and 1.61%, respectively. Seeing this trend, you can easily assume the property prices for housing projects in the year 2010 to be again slack or more precisely, investment friendly.

National Housing Bank (NHB) has cited many reasons behind the slowdown in property rates in the metropolitan cities of India. According to NHB, some factors that have led to fall in the residential property price index are:

• Recessionary pressure on global economic conditions
• Revenue loss to Information Technology industry
• Increase in unemployment rate

However, India has a resilient economic system and fast recovery across several sectors including IT and retail is a reason enough to expect a turn around in the property prices in near future. By 2011, the real estate market in India can be expected to account for large earnings, especially in the housing projects. In fact, the survey reports of Deutsche Bank reveal that India would need to build 10 million housing quarters across various cities on account of:

• Fast growth in population
• Increase in disposable incomes of the employees
• Growing needs for small households

Besides, going by the trends, it is easy to point out that the property prices in the smaller cities in India have picked up pace, with an exception of Jaipur and Kochi, which witnessed 11% and 7% slowdown in the property rates in even the latter part of the year 2009. Experts have pointed out several reasons as to why the cities of Jaipur and Kochi have not been able to track same path as their peers. These are:

• Slowdown of global economies
• Unpredictable movements in import and export market of India

Now, coming to the small Indian cities that have experienced a roaring increase in residential property prices, it can be said the housing development board is planning to introduce attractive discounts in luxury and up-market segments to make them affordable for the people of mid-income group. The small cities that have seen property price hikes are Bhopal, Pune, Patna, Lucknow, Surat and Gurgaon. These cities apparently witnessed 10% to 16% rise in rates. According to analysts, development work and proximity to main metropolitan cities are the two factors that have given boost to the property prices in these areas.